Taxi Driver Online

I've always been sceptical about LTI's far East venture because quite frankly apart from the manufacturing of spare parts I can't see it working. Here are three reports from the Daily telegragh that raise concerns about the future of LTI.
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The Daily Telegraph (LONDON)

March 27, 2007 Tuesday

SECTION: CITY; Business Club

HEADLINE: Black Cab firm hails China as way to go London Taxis International is looking to manufacture overseas to stave off growing competition, reports Philip Smith

BYLINE: Philip Smith

LONDON Taxis International, the Coventry-based vehicle manufacturer, isn't used to competition, such is the iconic status of its world-famous "black cab''.

"Japanese tourists are told to get into a black cab when they arrive at Heathrow Airport because they are safe,'' said Peter Shillcock, LTI's managing director. "And they are shown pictures so they know what to look for.''

Such is the global status of LTI's famous body shape that when it launches a new model - such as its latest TX4 - it sticks closely to that template.

Last year it hand-made 2,800 purpose-built 2.5 litre-engine taxis, with their trademark tight turning circle - 97pc of which were sold in the UK and 60pc in London alone. Despite offering a range of colours - Nottingham, for example, wants them in green - 85pc of its orders are for the standard black. And with pre-tax profits of pounds 3.7m on an pounds 84m turnover, life should be secure at the very least.

Yet despite intense lobbying by LTI, a trend among the nation's 400-plus licensing authorities to alter the strict safety levels governing hackney carriages - taxis that can be hailed at the kerbside - has meant the company now faces a growing threat from other vehicle manufacturers, said Shillcock, 45.

"Peugeot, Citroen, Fiat, VW, Mercedes all now provide converted vans as taxis,'' he said. These are often at a lower price than the pounds 27,000 to pounds 34,000 that LTI's range of three models cost new.

It means Shillcock, keen to maintain the safety and security aspects, and meet strict emissions standards and disabled access requirements, must find ways to lower the cost of the trademark taxi and establish other revenue streams to help offset the threat to the bottom line.

LTI is the trading company of Manganese Bronze Holdings, a plc with a plethora of small investors and major institutions who own the bulk of its shares. The company was created in the late 19th century selling manganese bronze to make ships' propellers. In 1919 it took over a company making taxi bodies and dabbled in the motorcycle sector owning BSA, Villiers and Triumph before settling three years ago solely on cabs. Since the demise of its only mainstream competitor, Metro Cabs, LTI has enjoyed a near-monopoly and wallows in the claim that it's the UK's largest British-owned car manufacturer.

The company has four divisions: the bulk being taxi manufacture with 370 staff, where it buys the engines, transmission and other components, presses the body parts and assembles the taxis.

It also ships the vehicles worldwide - in small numbers - to places such as Angola, Turkey and the Philippines. "A lot are used by hotels or golf clubs,'' said Shillcock.

LTI's other divisions include a property-holding portfolio, a small chain of taxi retailers - Mann & Overton with 170 staff - and a business offering finance to would-be buyers with Lloyds TSB.

Emerging UK competition and demand from global customers means LTI needs to change gear. Shillcock sees its future in China.

"We are forming a joint venture with Chinese car manufacturer Geely,'' he said. Under that pounds 53m deal (funded by a mix of bank loan and share issue) the taxi, a limousine and two saloon cars will be made in China for use in its domestic market as well as export worldwide.

"We had to find a country where we could both manufacture and where there is a ready market,'' said Shillcock. "That is China.'' It aims to make 40,000 vehicles a year in China, 20,000 of them taxis. Geely will retain Far Eastern distribution rights for taxis with LTI picking up the rest, supplying the world with Chinese-made cabs.

By significantly increasing production, LTI - in China and Coventry - will benefit from economies of scale so its homegrown cabs will be more price competitive. For the other three vehicles, LTI will only have UK rights, which will allow it to increase its domestic range.

"We are currently a one-product and virtually UK-only company. This deal means we can become a multi-product retailer and be more price competitive.'' The deal is due to be concluded in June.

The joint venture will mean LTI, domestically, will go mainstream. The saloon cars will be pitched in the executive range competing against BMW and Lexus. The potential customer base will greatly increase. "We will be switching from being a fairly small manufacturer and distributor and we need to develop our retail side,'' added Shillcock.
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The Daily Telegraph (LONDON)

March 27, 2007 Tuesday

HEADLINE: Expert View

BYLINE: Andrew Cooper Adviser, Business Link Birmingham and Solihull

Peter Shillcock seems to have everything in hand but the question is, what are these cars to be called? With plans under way, a full marketing strategy needs to be worked up as soon as possible to ensure the new brand can compete against more established brands.

While the term "black cab'' means so much to its customers, the challenge is creating a brand capable of carrying these same values across a diverse product range. Brand values are very important prompts, helping customers identify with a product, so Shillcock has to get across the right message. If the products are also going to be sold globally, the brand name and related marketing needs to be relevant to the different markets. He should make sure the brand doesn't have an undesirable local meaning. Finally, although there are plans to sell to existing taxi customers, LTI has to consider if this is a sustainable approach. It must be prepared to take the new products to mass market with comprehensive branding and marketing plans.
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The Daily Telegraph (LONDON)

March 27, 2007 Tuesday

SECTION: CITY; Business Club;

HEADLINE: Expert View

BYLINE: Michael Dean Group marketing manager, National Computing Centre

Can an unknown car brand compete with BMW and Lexus? Will the London taxi heritage confer the right level of kudos? I don't think so, especially when you consider that the brand in question has no real knowledge of consumer marketing or retail channels. A deep understanding of customer perceptions and behaviour is required here, not to mention brand positioning and having a great-value product.

The taxi-limo brand extension seems a less risky step forward. LTI should consider further segmentation, such as a premium TX4, with all the luxuries, better suspension, traffic systems and wireless computer access, perhaps an eco-friendly variant. If manufacturing costs are lower in China, why not move all production there? After all, it's the association with London that's important, not where they are made. LTI should also campaign to bolster the association of the London cab as an essential London icon. If there are no traditional London cabs, Geely will struggle to sell in Asia.
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Yet despite intense lobbying by LTI, a trend among the nation's 400-plus licensing authorities to alter the strict safety levels governing hackney carriages - taxis that can be hailed at the kerbside - has meant the company now faces a growing threat from other vehicle manufacturers, said Shillcock, 45.

"Peugeot, Citroen, Fiat, VW, Mercedes all now provide converted vans as taxis,'' he said. These are often at a lower price than the pounds 27,000 to pounds 34,000 that LTI's range of three models cost new.



Does this mean that they have seen the light and could be about to drop prices and all those who have gone out and bought one for £34000 will be left with a vastly reduced equity, more fool them for not waiting, It would be good to see the price around the 20k mark, but I think once they are made in China sales will fall, and that will slowly be the end, and what will the PCO and Red Ken do then

I think LTI only have a future if they do a conversion range as well as the TX range.

When you can buy an E7s for less than £21,000, and the TW200 for just over £20,000, then LTI have a problem.

And IMO the TX range isn't the solution.

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IDFIMH

Just a thought, if the price comes down and someone has already signed on the dotted line to take delivery how do they stand, will they get compo from LTI or the finance company, I thinks not
We need to inform people not to buy until the dust settles, or they could be out of pocket to the tune of 14k

I don't think they can get the price down.

Maybe if they are made in China, but even then who knows.

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IDFIMH

Sussex there was a story on the lunchtime news about the re launch of rover and the workers earn a staggering 2k a year so they will only need to make 9 or 10 tx's to make a profit, and the way they work they could make 50 tx's a year, or a day even

I think the TX4 might be a winner for them.

Everytime I go out I see a new one licensed. Not seen a Gold yet though.

I can think of 35 thousand reasons why.

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Unmet demand you're having a laugh