17th Oct 2014 15:37
LONDON (Alliance News) - Eco City Vehicles PLC, which converted and sold Mercedes Vito vehicles for the London taxi market, collapsed into administration Friday, after suffering a sharp sales decline and losing its deal with Mercedes.
The company said Kirstie Provan and Mark Fry of Begbies Traynor were appointed as joint administrators Friday.
Eco City has been hit by a string of issues, including problems with the rear-wheel steering technology it installs in the cars which it resolved with costly upgrade programmes. It was still facing law suits about the issue.
It swung to a profit in 2013 as revenue increased and the exceptional costs booked in 2012 for resolving the technology issues didn't re-occur. However, sales slid in 2014 as competition in the London taxi market intensified.
After years of being dominated by the "Black Cab", now made by China's Geely after the company that built it went bankrupt in 2012, the market is now seeing new entrants arrive, including Nissan, which unveiled its new taxi model in January.
In August, Eco City blamed taxi booking app Uber and London Mayor Boris Johnson's plans for the introduction of zero emissions standards from 2018, for causing its market to remain challenging in the first half of the year. Revenue in the six months to June 30 declined by 33% to GBP11.14 million, down from GBP17.0 million a year earlier, as new Vito taxi sales declined to only 139 vehicles, compared with 299 in the first-half of last year. It said the Vito's share of the new London licensed taxi market fell to 24%, from 44% a year earlier.
Last month, Eco City said its One80 subsidiary which owns the intellectual property rights to the rear-wheel steer technology and other design rights used on the Mercedes Vito taxi, was is set to be placed into administration, and the company went into talks to try and raise new funding.
Then Mercedes-Benz opted to terminate its stocking facilities and trading agreements with Eco City's subsidiary KPM Taxis PLC with immediate effect. A day later, Eco City said administrators had been appointed for both its One80 and KPM Taxis subsidiaries.
Earlier this month, the company said it intended to appoint administrators for the group in order to give its directors enough time to evaluate its options.
"The appointment of administrators causes the automatic termination of the company's Nominated Adviser and Broker agreement with immediate effect. Pursuant to AIM Rule 1 the company has one month to appoint a replacement nominated adviser before its admission to trading on AIM will be cancelled," it said in its statement Friday.
By Steve McGrath; [email protected]; @stevemcgrath1
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