Black cab group faces claims over fires
http://www.ft.com/cms/s/0/a108b5d0-8a6b-11dd-a76a-0000779fd18c.html
Manganese Bronze, London’s black cab maker, could face liability claims from at least 800 owner-drivers whose vehicles were pulled off the road last week following 12 unexplained engine fires.
The Licensed Taxi Drivers Association (LTDA) said on Wednesday it was unhappy about how long an investigation could take and that it would “pursue those responsible for compensation, and this could include London Taxis International [which makes the vehicles and is wholly owned by Manganese], the retailers, and very possibly Manganese and the finance companies”.
The LTDA said a claim could be significant. The affected vehicles – early models of the TX4 – cost between £30,000 and £40,000 including finance charges. If the association pursues a full claim, Manganese, which also has the lion’s share of the retail market through its Mann & Overton subsidiary, could face a liability of more than £30m.
In the six months to January 31, Manganese reported pre-tax profits of £1.5m on turnover of £43m.
John Russell, chief executive of Manganese, said that the company did not know yet whether the problem would have a material impact on its business. An investigation has been launched into the problem but he could not say how long it will take. The group has made no announcement to the Stock Exchange.
Manganese, which sells 60 per cent of the cabs bought in London, has felt the effect of the credit crunch and high fuel prices.
At the half year, Manganese said like-for-like sales had fallen more than 30 per cent. which was one of the reasons for its joint venture in China with Geely Automobile Holdings to produce TX4 cabs for the Chinese and international markets.
Mr Russell said an investigation would establish responsibility for the fires, and if and how compensation would be dispensed. However, in terms of the three-year TX4 warranty, Mr Russell said the company was ultimately responsible. “We will co-ordinate and manage any compensation processes that could arise from the investigation.”
Loss of earnings would be covered the company’s insurance, he said, but drivers were also required to do their best to minimise any losses by sharing cabs or renting replacements.
However, one cab driver said the situation was a crisis for the small community of London owner-drivers. “This is our Lehman Bros.”
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