London Taxi still eyeing local production

THE London Taxi Company is still considering local manufacture for its Geely TX4 cab despite the collapse of our automotive industry, with its local chief suggesting that Australia could become a right-hand drive export base for the quirky cabs.

GoAuto reported in September last year that the local distributor of the Geely-owned London Taxi Company would look to build its high-riding white cabs in Australia, depending on demand and pending the outcome of a trial that is currently underway in Perth.

London Taxi Company Australia chief executive Evan Simeon said the parent company was still keen on looking at the viability of local production if the business case stacks up following the trial.

“The London Taxi Company have made it clear that they would like a connection with their local marketplace,” he said.

“That connection being, if they can have a manufacturing base they can make viable, then they would love to have one. They have done that in other parts of the world, Geely has had a connection with their local marketplace in terms of manufacturing.

“Whether we can make it work financially is another thing but it is their philosophy, so if we can make it work and there is a business case certainly we will investigate it.”

Mr Simeon said the discussions he has had since last year about Australian production with local automotive industry organisations has been positive, but that the company would not rely on government hand-outs, similar to the ones that propped up Ford, Holden and Toyota, to be viable.

“We are not looking for handouts from the government. It’s only a business deal if it can work without handouts. Sure there might be some incentive grants to set you up but we don’t want to be on the continual drip, it’s the not base upon which we want to operate. If that’s the case, we don’t want to be here.”

When asked what volumes the company would need to make an Australian production business case work, Mr Simeon said it was too early to tell but that it would be significantly less than the minimum production levels required by the big three car-makers as it was a more specialised industry.

Mr Simeon said if local production eventually goes ahead, Australia could benefit further by becoming a home base for right-hand drive production, exporting to other right-hook markets in the region.

“You might find that as this market develops and as we develop other markets in the region, we could become the right-hand drive producer in the region, as opposed to just Australia. It all depends on how big we can make that market and how much we can supply that market.

“It might end up being New Zealand, Indonesia, Singapore, Hong Kong, Japan. All the right-hand drive markets in the region. If you get a market big enough that you support it then you can make it work, so all those factors need to be taken into account. In isolation at the moment it’s pretty hard to say because the volumes are small,” he said.

Another option for local production would be to take a similar approach to Geely’s operation in the United Kingdom where the vehicles are assembled from a CKD (complete knock down) kit with parts imported from China.

Mr Simeon believes that this could also have a positive impact on the local industry as it could mean engaging Australian parts-makers.

“The good thing about that is CKD will encourage local suppliers to supply goods that are cheaper to source locally than they are to import. But you wouldn’t import batteries because they are too heavy, so all the heavy stuff you would get locally. There are some things that we could suit in this marketplace in the future that we could likely source.” With Ford withdrawing from its local operation in 2016 and Holden and Toyota set to depart in 2017, Mr Simeon said there is opportunity for Geely to take advantage of the skilled workers that will be unemployed as well as the production facilities that will be cleared out in three to four years time.

“Notwithstanding the fact that others have pulled out, it is certainly still on the agenda. In fact it probably makes us more interested and want to do it because there would be some good opportunities to take up the skills that are there.

“When we first talked about this it was only Ford closing but now we have got Holden and Toyota going, there is an even bigger pool of skills to draw upon now.” The London Taxi Company is currently undertaking a trial in conjunction with the Western Australian state government to determine whether the white cabs satisfy the needs of the local taxi industry.

More trials are in the works before a planned wider roll-out, but Mr Simeon said this will become clearer following the installation of the 100 vehicles in Perth by the end of April.

Mr Simeon said the London Taxi Company will complete its internal review of the trial in the middle of the year.

The Australian introduction of the cabs faced a number of hurdles early on, including a take-over by Chinese automotive giant Zhejiang Geely in 2012 of original parent company Manganese Bronze Holdings (MBH), saving it from administration.