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Black cabs of London get a bailout from China

Source : BUSINESS_STANDARD
Last Updated: Sun, Feb 03, 2013 02:31 hrs

London: For more than six decades, black cabs have been as much a part of London's street scene as gray rainy days.

Now the troubled maker of a vehicle that is as British as the double-decker bus is getting a lifeline from a Chinese automaker whose last big acquisition was paying $1.3 billion for Volvo in 2010. The Chinese company, the Zhejiang Geely Holding Group, said on Friday that it had agreed to pay $17 million for the assets of Manganese Bronze, whose London Taxi Company unit produces the taxis.

“I am delighted that Geely has successfully secured the future of the London Taxi Company, ensuring the continuing manufacture of a world famous, fully accessible and instantly recognizable vehicle synonymous with London,” Boris Johnson, the mayor of London, said in a statement.

After posting losses for more than five years, as well as higher costs and accounting errors, Manganese Bronze, which made ship propellers in the 19th century, entered into administration, the British equivalent of bankruptcy, in October. A recall of about 400 of its taxis had pushed the company over the edge. The recall came after it discovered faults with some steering boxes it had ordered from a new supplier in China.

Geely, which acquired a 20 per cent stake in the company as part of a joint venture in 2007, said it planned to develop new taxi models, including one that is more environmentally friendly, and to sell more vehicles abroad.

Manganese Bronze produced the first London cab in 1948, but the vehicles trace their roots to 1919 and a coach building company. More than 100,000 taxis have been built at the company's factory in Coventry, in the English Midlands. The taxis have also found homes outside London. Last year, Azerbaijan ordered more than 1,000 black cabs to upgrade its taxi fleet in Baku, the capital. The car's design has not changed much over the last 65 years, still bearing the same round shape. With seats to fit five passengers, it is more spacious than most passenger cars. The black cab is still the only taxi that can be hailed in the streets of London. Rival cabs must be hired by phone or through their offices.

The word cab comes from cabriolet’, which used to describe a two-wheeled carriage pulled by a horse. London drivers must pass a thorough exam called “the Knowledge," which includes memorizing streets and landmarks. Each model has to go through 600,000 miles of taxi duty cycle testing before being let onto London's streets.

The London cabs are still popular, but strict rules for the car and the driver dating to the 1940s, including a specific tight turning circle that allows the cars to make a U-turn even in narrow streets, made the vehicles less competitive. Rival taxi companies started to emerge, won customers with cheaper fares, and raised doubts about whether the Knowledge was still necessary when electronic navigation systems were available.

In 2008, the traditional black cabs also faced competition from the German carmaker Daimler, which teamed with a British company, KPM-UK, to make a bigger taxi based on the Mercedes-Benz Vito van, a vehicle sold in Britain since 1996.

Riki Stark, who drives a traditional black cab, said he paid 40 Pounds (62.80 Dollars) a week for his black cab, while colleagues paid much more. Many cabdrivers have started to display corporate advertising on their vehicles because of the higher costs.

Waiting for a customer near the Parliament building, Mr. Stark said he was glad that Manganese Bronze "got granted an extension" but doubted whether the company would survive in the long term.

“Don't get me wrong," he said. “I love this car. But it's just not worth the money."




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