Bumpy road ahead for London cabbie business

London's black cab reinvents itself
London's black cab reinvents itself


    London's black cab reinvents itself


London's black cab reinvents itself 03:40

Story highlights

  • The London Taxi Company has been ferrying passengers around the city for 60 years
  • But the famous company no longer has a monopoly on the streets
  • It is facing competition from the likes of Mercedes and Nissan
  • The company must innovate to ensure it doesn't struggle, as it has in the past

The London Taxi Company has been ferrying the city's passengers around for more than 60 years, ensuring its brand is recognized the world over.

But walk through London's streets today and you will see this iconic company, which has some of the globe's most knowledgeable cabbies, no longer has a monopoly on London's market.

According to David Bailey, of the Aston Business School, the competition "was opened up some time ago."

Read more: Skyscanner brings a pinch of Silicon Valley to Scotland

The London Taxi Company, Bailey said, has been "losing market share to the likes of Mercedes, who can take a van and produce it in very big numbers, and get their cost down and convert some of them into taxis.

"[It's] much more difficult, then, for the London Taxi firm to compete with them .....they are producing in small volumes at higher cost."

Read more: Scottish pride restored by world porridge champion

And this is where many of the taxi company's problems lie.

The making of the London black cab
The making of the London black cab


    The making of the London black cab


The making of the London black cab 02:47

I had the opportunity to film at their Coventry factory last year and see the work they do first-hand. But a week after my visit, the company, then owned by Manganese Bronze, filed for administration after failing to have turned a profit since 2007.

Cabbie turns taxi into hotel for Games
Cabbie turns taxi into hotel for Games


    Cabbie turns taxi into hotel for Games


Cabbie turns taxi into hotel for Games 02:35

To add their troubles, the company also discovered a safety defect in its new TX4 model, leading to the recall of 400 cars and a stop in further taxi sales.

Biofuels firing London cars
Biofuels firing London cars


    Biofuels firing London cars


Biofuels firing London cars 02:42

Read more: How saffron could save Greek farmers

But a year is a long time in business and today, The London Taxi Company is back from the brink, after being bought by Chinese automotive giant Geely for £11 million.

While I am glad that production has resumed and their very skilled workers have their jobs back, I am apprehensive about the future of their UK factory.

Read more: Christine Lagarde warns against 'complacent' Europe

The vice president of The London Taxi Company, Peter Johansen, told me their factory will produce 1,400 vehicles for the UK market -- that's 12 vehicles a day.

It's hardly going to swell their coffers.

To add to that, workers here won't exactly be putting their creativity to good use. As I found out, these vehicles will simply be assembled here with pieces that come from Shanghai.

Read more: Is Greece finally on the mend after economic crisis?

The set-up begs the question: What's the real reason for keeping a production base in the UK?

According to Bailey, "this is about Geely buying The London Taxi Company to act as a distributor of Geely cars, which will be arriving fairly soon to the UK and European markets. So, it's very much a case of the Chinese are coming, in quite a big way."

So for now, Geely is testing the ground in Europe; preparing it for their arrival.

Johansen tells me the company is gaining ground globally. "They will move into Western Europe and other places eventually, but their focus is on the markets closer to home in China where they are made," he said.

Read more: Euro pioneer: Europe would have suffered without single currency

"I think when they have established those markets, and become established in those markets, I think you will see then start to manufacture outside China," he said.

In the meantime, they face a challenge: How to improve their taxis? And how do they compete with the cheaper and lighter Eco City Vehicle which is customized by Mercedes-Benz? Japan's Nissan is also reported to be launching a taxi for the London market.

But Johansen welcomes the challenge. "Competition is always healthy," he said. "You have to be able to compete in your product and we produce the elite taxi that everybody will like to have, so I'm not frightened by any competition."

That may work while there is cash available. But to secure a less bumpy future, they need to innovate. Being an icon may no longer be enough.

      Marketplace Europe

    • spc marketplace europe latvia valdis dombrovskis_00021207.jpg

      Latvia's economic prospects

      CNN's Nina Dos Santos visits Latvia to speak to the country's outgoing Prime Minister and the prospects for the eurozone's 18th member.
    • spc marketplace europe malta immigration africa_00002118.jpg

      Asylum seekers in Malta

      Malta is the gateway to Europe and on the frontline of the immigration flows. Isa Soares reports from a detention center on the Mediterranean island.
    • spc marketplace europe malta immigration vox pops_00001419.jpg

      Maltese concerned over migrants

      CNN's Isa Soares speaks with people on the streets of Valletta who say their country can't cope with more migrants from Africa and the Middle East.
    • spc marketplace europe malta george vella_00032005.jpg

      Malta's migrant struggle

      Malta cannot afford to continue supporting migrants from war-torn countries in its over-crowded detention camps, the country's foreign minister has told CNN.
    • spc marketplace europe 2013 what went wrong_00020426.jpg

      What went wrong in 2013?

      Slow recoveries, bailouts, and youth unemployment. Richard Quest speaks to Europe's top CEOs about the issues of 2013.
    • spc marketplace europe 2013 defining moments bob parker intv_00010826.jpg

      2013: The year of tapering

      CNN's Richard Quest speaks to economist Bob Parker about defining moments of 2013 and about what to expect in 2014.
    • spc marketplace europe estonia energy_00000923.jpg

      Estonia's dirty energy drive

      The Baltic nation of Estonia is developing its oil shale energy reserves in a bid to become energy self-sufficient.
    • spc marketplace europe nani beccalli falco_00041005.jpg

      GE Europe exec's jobs warning

      Europe must stop being nationalistic if it wants to help a lost generation of workers, the regional boss of U.S. conglomerate General Electric says.
    • spc marketplace europe greece petros christodoulou_00002025.jpg

      Is Greece on the mend?

      Greece is on the way to economic recovery as investor faith returns to the recession-ridden eurozone nation, an executive at Greece's largest bank has told CNN.
    • spc marketplace europe euro jim cloos_00012617.jpg

      Don't blame euro, says pioneer

      One of the masterminds behind the euro says Europe would have suffered a far worse fate if the single currency had never been created.
    • spc marketplace europe maastricht eu_00002401.jpg

      The birthplace of the euro

      Nina Dos Santos visits the Dutch city where the European treaty carrying the city's name came into force 20 years ago.
    • spc marketplace europe spain working hours_00010525.jpg

      Spain may turn clocks back

      As Spain continues its drive to slash budgets and cut spending, one of the nation's favorite pastimes is under threat as ministers look for ways to boost productivity.