London taxi maker cuts production

In a management statement today, the company said trading in the UK continued to be “impacted by the uncertain macro economic conditions”. This made forecasting the level of demand for new vehicles more challenging, it said. Overall vehicle sales for the nine months to the end of September were down 37.5%, to 1,628 vehicles versus 2,604 vehicles in the comparable period last year. Earnings continued to be adversely affected by the strength of the Euro; the increased the cost of the engines it buys from the Italian engine manufacturer VM Motori; the costs of supporting its joint venture set up with engineers; and the cost of the international sales and marketing team, the statement said. “We have responded to lower sales and higher working capital by reducing vehicle output to lower inventory levels, implementing an aggressive reduction in operating costs, and headcount reductions. The result of these actions is a 15% reduction of the manufacturing break-even level to approximately 2,000 vehicles per annum,” Manganese Bronze said. The company added that it had been carrying out an investigation into the root cause of the 12 under bonnet fires that occurred over the last few months in early production models of the TX4 taxi (pictured). Following the product recall of all TX4s, modifications to the emission control equipment, the heat management system and under bonnet insulation had been carried out on nearly 400 vehicles, 600 are off the road awaiting the rework and an additional 4400 require the rework. This is planned to be completed by the end of February 2009 at a cost of around £4 million. Manganese Bronze’s joint venture in China offered the greatest potential to secure a long-term profitable future, it said. Commercial production there is scheduled to begin at the end of 2008. North America is believed to represent the biggest market opportunity for the Shanghai built TX4.