THE future of black cab manufacturer Manganese Bronze was plunged into doubt yesterday as it suspended its shares after discovering a defect in its latest model.
The Midlands-based company said its financial position was unclear and it was considering all options for the business including administration.
The crisis was triggered by the discovery of a problem in a steering box introduced into its latest TX4 London taxi in February. Around 400 vehicles, which cost around £32,000, are being recalled and sales of further ones suspended.
In a statement, the loss-making company – which was also recently hit by a £4 million accounting issue – said: “The suspension of sales will have a very material and detrimental impact on the group’s cash flows and the board is working to establish the options available given the impact on working capital.”
Manganese Bronze, which is 20 per cent owned by China’s Geely Automobile Holdings, said the two companies were working together to try and find a solution to the steering box fault.
“We’re not in a position yet to give a view as to what it will cost us to fix it, nor can we make an estimate of what the cash impact will be,” chief executive John Russell said.
“We need to work our way through to the technical solution and then get a sense of how long that’s going to take and we can make the judgments on both the profit effect and the cash effect but that’s going to take us some time.”
The fault came to light after two cab drivers reported problems with steering, but the company stressed there had been no crashes or injuries as a result.
Russell said that in certain circumstances “the fault can result in a safety risk to drivers and their passengers”.
“We’re taking this action to make sure no-one is at risk,” he said.
Tony Kenmuir, a director of Edinburgh-based Central Taxis, said he understood there were “probably a few dozen” affected vehicles across Edinburgh but said that the recall would not impact on availability of cabs in the city.
Kenmuir said he believed the company had suffered from increasing competition from mainstream vehicle manufacturers such as Mercedes-Benz and Peugeot at a time when questions were being raised over the reliability of its own models. “They’ve been getting a smaller share of a shrinking market, although tourists and drivers still have a huge amount of affection for the vehicles,” he said.
Manganese has been loss-making for the past four years as its London Taxi Company arm has been hit by a consumer spending slowdown and more competition. Manganese slumped deeper into the red in the six months to 30 June, with losses of £3.6m against £2.4m a year earlier. The group’s manufacturing division makes about 2,700 cabs a year and has produced more than 100,000 since it started in 1948. The TX4, was launched in October 2006.
The retail operation employs around 400 staff and has ten main dealers in the UK including two sites in Scotland at Broxburn and Govan.
Manganese Bronze shares have lost two-thirds of their value since the beginning of this year. They had closed at 10p on Thursday, valuing the company at just £3m.
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Sunday 19 May 2013
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