Manganese Bronze Holdings, sole maker of the classic London black cab, was unable to agree to a rescheduling of its debts with creditor banks.
Unfortunately, iconic status and the retention of clever retro design can't make up for shoddy engineering and the lack of industrial scale in the capital-intensive automotive industry, as Manganese Bronze Holdings PLC has discovered.
The sole maker of the classic London black cab declared itself insolvent and called in the administrators on Monday after it was unable to agree to a rescheduling of its debts with creditor banks.
"Discussions with various parties to secure funding on acceptable terms to address the group's financial needs have proved unsuccessful and it has therefore filed a notice to appoint administrators," the company said Monday. A spokesman for Manganese Bronze said PricewaterhouseCoopers would likely be appointed as the company's administrator in the coming days.
The financial collapse of the company that has a 73% share of London taxi sales follows the recall earlier this month of 400 of its new TX4 cabs and the suspension of sales of the model after the firm discovered a defect in the vehicle's steering mechanism.
Manganese Bronze, which since 2009 has produced cabs using components made by a joint venture with China's Geely Automobile Holdings Ltd., blamed the fault on equipment provided by another unnamed new Chinese supplier. Geely, one of China's largest automotive groups, is one of Manganese Bronze's major shareholders.
The product recall proved the breaking point for the company's balance sheet, already weakened by poor sales and declining profitability. Management's reputation was also dented this year by the discovery of a £4.3 million ($6.88 million) error in its accounts that had overstated the company's performance in 2010 and 2011. Manganese Bronze's pretax loss widened to £3.6 million in the six months to June 30 from £2.4 million a year earlier on a 11% decline in revenue.
Despite its iconic status, Manganese Bronze is a minnow in the automotive world, selling just 1,081 vehicles in the first half of this year.
Until recently, it was the only cab manufacturer meeting London's stringent Conditions of Fitness, which lay down standards which vehicles must meet to be used as cabs. Among these rules is a maximum 25-foot (7.5-meter) turning circle, which allows taxis to make U-turns in city streets laid out in the days of horse-drawn carriages.