By Bloomberg News March 18 (Bloomberg) — Geely Automobile Holdings Ltd. , the listed unit of the Chinese auto company trying to buy Volvo Cars from Ford Motor Co. , may take control of the maker of the iconic London black cab to step up overseas expansion. Geely may increase its holding in Manganese Bronze Holdings Plc to 51 percent from 19.9 percent by buying new shares at 70 pence each, Mark Fryer , finance director of the Coventry, England-based company, said in an interview. Manganese, which produces taxis and parts in a Shanghai venture with Geely, will spearhead the Chinese automaker’s plans to sell its own saloon cars in the U.K. and Europe, he said. “This is going to revolutionize the company,” Fryer said yesterday. “Our future will be both as a manufacturer of black cabs in Coventry, although more of the parts will be coming from China, and an assembler and distributor for Geely vehicles.” In a statement yesterday, Manganese said that parts for its TX4 vehicles will be made in Shanghai, in a move that would eliminate about 60 positions at its Coventry plant. Chinese Premier Wen Jiabao is encouraging companies in the world’s third-largest economy to acquire technology and take on foreign rivals as part of a “go global” policy. Geely unveiled the Emgrand, its first homegrown model specifically designed for Western markets, in December and is seeking to use Manganese as its European distributor. ‘A Stretch?’ China is aiming for 10 percent, or an $85 billion share, of the world’s vehicle and auto-parts sales by 2015, the Ministry of Commerce said in November. “If you look back, you would have thought it was a stretch that British people would take to Japanese or South Korean cars,” Fryer said. “But Hyundai and Kia sold about 30,000 vehicles each in the U.K. last year and we sold 1,724. So it’s not going to take much to significantly increase the size and scale of our business.” Geely would become the second Chinese company to tie up with a U.K. vehicle manufacturer. SAIC Motor Corp. paid $116 million for the design rights to MG Rover Group Ltd.’s Rover 25 and 75 cars in 2005 and became the owner of MG’s plant in Birmingham after a merger with Nanjing Automobile Group Corp. in 2007. Manganese’s share sale, which needs shareholders’ approval, would raise about 14 million pounds ($21.5 million). The company yesterday reported a 6.9 million-pound 2009 loss. The shares fell 1.2 percent to 84.5 pence in London trading yesterday, valuing Manganese at 25.8 million pounds. Geely and Manganese need to agree on a range of commercial issues, including warranty policies and translation of handbooks, before the deal can go ahead, Fryer said. A Geely spokesman couldn’t immediately be reached for comment. Biggest Shareholder The Chinese automaker became Manganese’s biggest shareholder in 2007 after taking a 23 percent stake in the company as part of a 53 million pound venture in Shanghai to produce black cabs for the Asian market and parts for the British company’s plant in Coventry. That holding was diluted to 19.9 percent after a share placing in June. Production of taxis at the Chinese plant started in early 2009 and the first vehicles were sold in the third quarter. Making components in Shanghai for shipment to Coventry has led to cost savings of 1,200 pounds per vehicle so far with a further 800 pounds expected within six months. “Unfortunately, we have had to make redundancies in Coventry, but we are losing money and we can’t keep relying on shareholders to keep funding the business,” Fryer said. — Nerys Avery in London. Editors: Kenneth Wong , Chris Jasper To contact the reporter responsible for this story: Nerys Avery at Navery2@bloomberg.net
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London Black Cab Maker Manganese Plans to Deepen Link With China’s Geely
