Dark clouds for the Black Cab: Projection for London’s iconic Taxis
Business education classes teach a technique called “PEST analysis” to assess the market attractiveness or a health of a company. It looks at the external factors beyond your control, that are either opportunities or threats to your business.
In this context P.E.S.T is an acronym that refers to POLITICAL, ECONOMIC, SOCIAL or TECHNOLOGICAL trends coming in the near future.
Eco City Vehicles (ECV) is the company that makes black cabs and they are getting hammered by a perfect storm of PESTs. These are all threats with hardly any opportunities. A market report by “This is Money” discusses the bleak outlook for ECV.
Its shares slammed into reverse and closed 0.22p or more than 34 per cent down at an all-time low of 0.42p after the board admitted to a funding crunch and said it has launched a strategic review that could call in to question the company’s very survival.
ECV’s revenues in the six months to the end of June slumped 33 per cent to £11.14million, down from £17million a year earlier, as new Vito taxi sales declined to only 139 vehicles, compared with 299 in the first half of last year. Its share of the new London licensed taxi market dropped to 24 per cent from 44 per cent a year earlier.
So what are these 4 horses of the apocalypse?
Political & Economic : These two are interlinked where we have the flamboyant Mayor of London, Boris Johnson, pushing for zero emission goals by 2018 or face surcharges.
Technological : This is a bigger threat where Uber and the like, present an critical upheaval to the taxi industry in all the big cities including London. The successes are happening so quickly, they alone threaten the very existence of companies that manufacture the customized taxi. Even if it is eventually brought under heal by the political regulators, who would buy a new black cab today if you thought your potential business flow will be chipped away by the low cost of entry of Uber like drivers.
Social: There is a public desire for change in taxi world. Most customers like the convenience of Uber et al, and it would be a brave elected official who bans it outright. This article captures Boris’ position.
This is a classic “Adopt of Die” situation facing ECV. We suspect they will not have the luxury of time or money available to evolve. What is going on here is a market revolution and revolutions are often quick and bloody.
If ECV does cease to exist there will be no manufacturers of the black cab and the streets of London will look and sound very differently in a decade or so.