London Cabs Made in and for China – Geely going British

吉利控股集团 – London Cabs Made in and for China – Geely going British
By GCB_Europe ⋅ September 11, 2008 ⋅ Email this post Email this post ⋅ Print this post Print this post ⋅ Post a comment

geely_logo.gifChinese automobile brand Geely, which has been on our radar recently for introducing its Panda, KingKong and Dragon Brands, has now moved into the spot light for producing one of Britain’s most iconic vehicles: The London Cab. It’s part of an odd alliance that aims to give the distinctive black cab a greater presence outside its namesake city and the Geely brand a chance to portray craftsmanship and improve its quality perception outside of China – an opportunity just in line with the brands strategy….

London Taxi International, which will continue to build nine out 10 cabs used in Britain at a factory in Coventry, England, couldn’t increase production at its small-scale, high-cost plant. So it turned to a partner — and to China — as a way to drive overseas expansion.

“To say the writing was on the wall would be pushing it a bit too far. But you do need to make progress within the automotive industry,” said Paul Stowe, a British auto executive who is overseeing the joint venture between Britain’s Manganese Bronze Holdings, owner of London Taxi International, and Geely Group Holdings, one of China’s biggest independent automakers.

The venture is bearing fruit already, Stowe said, with agreements signed to sell 6,000 London Taxis from the Chinese factory, more than double the Coventry plant’s annual output. Most will go to cities outside China — places like Singapore, Dubai, Moscow — that covet the image associated with the London Taxis’ tradition of good service and durability.

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The cars are unlikely to displace other vehicles used as taxis in China, given their higher price and the strong political sway of bigger automakers with the local officials in charge of city fleets. Instead, LTI expects to sell them mostly to hotels, limousine services, airports, and individuals who might want to collect one, Stowe said.

Manganese Bronze Holdings hunted for nearly a decade for a suitable Chinese partner. Geely likewise was looking for a chance to bring onboard the new technology and quality upgrades it needs to get ahead in China’s brutally competitive market, without risking being swallowed by a huge international rival.

“We were the right size and available at the right time. It works well for both companies,” said Stowe.

Trial production of London Taxi’s TX4, equipped with 2.4-liter Mitsubishi engines, began last week in Geely’s Shanghai Maple factory. By mid-December, the plant will launch mass production.

By boosting volume, LTI expects to reduce costs by up to 60 percent, with most of the savings coming not from cheaper labor but from less costly parts, Stowe said. The price for the vehicles hasn’t been disclosed, but will be significantly cheaper than the British-made models, which sell for about 30,000 British pounds ($54,000), he said.

Unlike most highly automated modern auto plants, there are few robots since the London Taxi is hand-built and hand-welded. The result is a heavy-duty, durable vehicle that can be driven 1 million miles and last several decades.

But it’s the vehicle’s traditional idiosyncrasies, such as its famed ability to make extremely tight turns, and the storage space next to the driver’s seat that originally held hay bales in the days of horse and carriage, that give the black cab its appeal as “not just another car,” says Stowe, who as deputy general manager of Shanghai LTI Automobile is busy plotting the venture’s brand strategy.

Black cabs — which these days often come in other colors and are festooned with advertising — are seen strictly as a commercial vehicle back home. But in China, the vehicle’s novelty, and notoriety from appearances in dozens of films, lends it a certain cachet.

“It’s pretty cool to see a British car traveling on the street of Shanghai, just like in a movie scene,” said Xu Bin, senior auto trend editor for the local magazine Metropolis.

But much will depend on how Geely, which is in charge of selling the cars in China and the rest of Asia, decides to market the vehicle: The terms of the $95 million deal gave the Chinese side a 52 percent share in the joint venture, as well as a 23 percent stake in Manganese Bronze Holdings. The British partner holds 48 percent of the joint venture and rights to sales of the vehicles in the rest of the world.

More on Geely hitting the top 500 most valuable brand list in China HERE.