Manganese sales go into reverse

Manganese Bronze is the maker of the iconic London taxi

Nervous cabbies are reluctant to commit to buying new vehicles amid worries over the recession, the maker of the iconic London taxi said.

Manganese Bronze - whose TX4 cabs can cost up to £35,000 - said it had swung £600,000 into the red in the first half of 2009 compared with a £1.5 million profit last year after an 11.5% fall in vehicle sales.

The firm is pinning its hopes on its Chinese joint venture to boost international sales while returning the UK business to profitability.

Manganese's Coventry-based London Taxis International (LTI) makes the TX4 but cut staff by almost 20% last year. Staff also agreed a 10% pay cut.

Chief executive John Russell said: "UK sales performance continues to be challenging as driver's confidence to commit to the purchase of a new taxi remains weak due to uncertainty about the general state of the economy."

Manganese added that margins had also been squeezed by discounting from taxi dealers as well as the strength of the euro, as it imports engines from Italy.

But the firm has shored up its balance sheet and cut debt with a £9.4 million rights issue and has also seen a boost from the Government's scrappage scheme, which led to orders for 81 cabs so far.

Meanwhile the company hopes to sell around 1,000 cars in China this year, with its joint-venture partner lobbying local government and taxi operators to adopt the Shanghai-produced model.

The business was hit last year with a spate of engine fires for the TX4, which forced it to recall and refit almost 6,000 cabs at a cost of £3.8 million.

The group said the recall was now virtually complete and it has managed to claim back £1.1 million in costs from third parties - although it added that legal liability for the original problem had yet to be established.