PwC has been appointed administrator and stated the reason for the losses is down to a combination of poor UK sales, supply chain issues, and high warranty costs.
“As it stands, no decisions have been made as to the future ownership of the business,” said PwC. “We are continuing our discussions with a number of interested buyers and the situation should be clearer in the coming week.”
The MBH Group, which includes MBH Services and MBH Property Services, also had material accounting errors in the first half of 2012 that have increased the extent of its losses.
“More recently, the discovery of a steering fault resulted in the recall of around 400 vehicles and a suspension of sales which had an immediate detrimental impact on the Group’s cash flows,” said PwC in a statement.
The company added that it had retained enough staff members across the dealerships, production network and at head office to keep the business running, including those needed to solve the steering fault.
In 2007, the MBH formed a joint venture worth £53m ($79.5m) with Geely called Shanghai LTI Automobile Components (SLTI). Following a subsequent decision by MBH to hand over a controlling stake to Geely in March 2010 (read more here), body and chassis production of the TX4 London black cab was then moved to Shanghai from its UK base in Coventry.
The move meant that the supply of the majority of parts used in the manufacture of the taxi was transferred to Chinese companies, with the Coventry plant continuing to assemble the vehicle for the UK market. PwC would not confirm to what extent this move contributed to the supply chain issues cited as partly responsible for the collapse of MBH.
The impact on LTI’s outbound logistics providers in the UK is not yet clear. Acumen Distribution, which handles the movement of finished taxis from the Coventry assembly facility, was unwilling to comment on the development and there has been no comment from Gefco, which previously handled shipments from Coventry to Spain.