Geely eyes local production for London Taxi

CHINESE car-maker Geely could potentially build its London-style TX4 taxi in Australia if a proposed local trial and eventual rollout of the high-riding ‘white cabs’ proves successful.

Local distributor London Taxi Company (Aust) chief executive Evan Simeon has revealed to GoAuto that Geely would look at full-scale manufacturing or assembling the cars from completely knocked down (CKD) kits in Australia, depending on the outcome of a trial set to get underway in the coming months.

With Mr Simeon indentifying Victoria as the obvious first choice for a Geely production facility, the potential move could be a shot in the arm for Ford Australia workers facing the axe – and Ford’s supply chain – when the company closes its factories in Broadmeadows and Geelong in 2016.

“We have been talking to them (Geely) at the factory,” he said. “If this trial proves successful, and there is a business case, they will make these cars in Australia.”

The ambitious auto group, which owns Volvo and earlier this year rescued the London Taxi Co from administration, flagged the possibility of manufacturing the TX4 model in Australia when Mr Simeon was in China recently to see the final versions of the taxis.

“There is a chance here, if we get it right and we hope to make sure this trial is successful, that we look at a business plan,” he said.

“There is no guarantee it is going to happen, but it is certainly in our sights. I don’t want to give anyone a false impression, but it’s certainly in the sights of the organisation to manufacture them locally if there is a business case for that.”

Asked whether Geely was considering full-scale manufacturing or a simpler CKD operation in Australia, Mr Simeon said both options were on the table.

“Currently they assemble vehicles in Coventry in the UK which are CKD. All parts are manufactured in China, sent to the UK and assembled from CKD form.

They have experience in both areas. It will all depend what will suit at the time, if we go forward,” he said.

Mr Simeon said Geely was keen to look at markets beyond China for manufacturing opportunities and was considering other regions as well as Australia.

“They are looking at doing the same thing in other parts of the world. They would like to be manufacturing where they are supplying. They have got that in their plan. Not just for Australia, for other parts of world,” he said.

While Geely’s approach is good news for Australia’s ailing car manufacturing industry, Mr Simeon said a final decision would hinge on a number of factors, including the outcome of the forthcoming state-based trial.

“It all depends on circumstances at the time. It will depend upon the Australian dollar value, labour rates, how many parts they are producing in China. If it is in large volumes, the costs come down and all you have to do is assemble them here, maybe,” he said.

“There will be a study done on it. It’s certainly one of the elements they are looking at in the future.”

Mr Simeon said the initial cost of purchasing the Geely-branded taxi for Australian taxi owners and operators would be a key factor in determining the viability of a local operation.

“You would only want to do it if the price is the same, or less than what we are currently buying them from China for,” he said.

“You wouldn’t do it for more, unless there was a business reason to do so.

There might be a margin there where you will want to absorb some of that to make sure you get local manufacturing.”

One of the key benefits of producing the TX4 taxis in Australia is the reduced lead time from ordering to delivery. Mr Simeon said that apart from shipping, which can take around eight weeks, the ordering process and production priority of left-hand-drive models could potentially push the delivery time out by six to 12 months.

“We don’t want to be in a position where future orders or deliveries are held up because we can’t get enough product out quick enough,” he said.

“That’s one of the additional reasons why we want to produce here, apart from the fact we might be able to do it more efficiently and might be able to do it cheaper.”

As for scouting a suitable location for a local production site, Mr Simeon said he would ideally support a Victorian base, describing the southern state as the “Detroit of Australia.”

Although open to all offers, he said Victoria made sense as the infrastructure and supply chain networks are already there. He also highlighted the growing number of unemployed auto workers in Victoria, which will include around 1200 from Ford’s operations when the company closes its factories – and taxi operators’ vehicle of choice, the Falcon, is retired – in three years’ time.

“There’s going to be a lot of skilled workers that we are going to have in Australia that may not be employed in the motor industry in the future that are going to be wasted that could be utilised and put to work again,” he said.

The news comes as a shipload of 98 Geely TX4 ‘white cabs’ arrived at Fremantle Port in Western Australia last week in preparation for a real-world trial of the vehicles on Australian roads.

Mr Simeon said the London Taxi Company was in the process of determining which state or territory will be the first to conduct the trial.

Western Australia recently opened up submissions to car-makers for a four-year trial and it is believed four brands have put their hands up to be considered, including London Taxi Company.

Victoria is also in contention for the white cabs trial, although a decision on this was delayed following the handing down of the state government’s response to the taxi industry inquiry in May this year.

In the response, the Victorian government made 139 recommendations, including looking into a more diverse range of vehicles for the taxi fleet that better caters to disabled passengers.

The report said: “Superior-designed, purpose-built universally accessible taxi vehicles that are used in overseas jurisdictions – for example, the London ‘black cab’ and New York Nissan NV200 – should not be prevented from operating in the Victorian fleet as conventional and wheelchair-accessible taxis.”

The report also recommended that Victorian taxis no longer need to be yellow, allowing competing taxi operators to differentiate between each other and be more easily identifiable on the road.

Regardless of where it is conducted, Mr Simeon said a real-world trial was the most effective way to identify any mechanical changes that are required to ensure the taxis are suited to Australian roads.

“It’s important that we get the right information from this trial because before we do a full rollout, if there are any engineering tweaks we need to do we will do them before we do a full rollout. We have got the hot-climate spec in this car, but there might be some other things the public want or we want to improve on.”

As GoAuto reported in March, plans have been underway to bring the Geely-branded white cabs to Australia since last year.

The plan took a hit in late 2012 when the original parent company of London Taxi Company, Manganese Bronze Holdings PLC, slipped into administration, but it was saved when Zhejiang Geely bailed the iconic company out in early 2013.