Car manufacturing startup Tomcar Australia has entered voluntary administration, citing high manufacturing costs and concerns with investors as the reasons for shutting its doors.
Launched in 2005, the company was founded by brothers David and Michael Brim, who spent seven years in development before releasing their first product in 2012. The company made 100 of its premium off road, all-terrain cars in its first run, which sold out almost immediately after first launch
Since then the company had seemingly been going from strength to strength, with Fairfax reporting in June last year business was “on the up” and working on a $100,000 feasibility study with the CSIRO to turn its cars electric as part of the body’s Kick-Start program which concluded midway through 2017.
David Brim told Fairfax he and his brother had funded the business to the tune of $15 million over its lifetime, having given “very small” amounts of shares away, and back in 2013, he told StartupSmart the business was “strong and profitable”.
However, the business was placed into voluntary administration yesterday, with Christopher Baskerville and Malcolm Howell from Jirsch Sutherland appointed as administrators of Tomcar Australia Pty Ltd. The business has stopped trading and the first meeting of creditors is scheduled to be held on February 15.
The administrators told StartupSmartS that high manufacturing costs, low sales volumes, and a “situation with an investor that led to legal proceedings, resulting in legal costs”, have contributed to the voluntary administration.
The administrators are currently determining whether the business can be sold, and say there will be a creditors meeting in due course.
The administrators have confirmed the turnover for Tomcar in the 2016-17 financial year was $4.65 million, despite previous reports that the company’s turnover was “just under $10 million”. Tomcar had five employees.
In a statement provided to StartupSmart, David Brim described what he called a “devastating turn of events for Tomcar Australia”.
“We had such high hopes for Australian niche vehicle manufacturing,” he said. Brim said the company shut its doors because of concerns with investors and “ever increasing manufacturing costs”, which “put untold strain on the cash flow of the business”.
Brim also referred to a deal falling through with an unnamed overseas investor, which left the company “with escalating legal fees and product costs, which simply pushed us over the edge”.
“We want to thank everyone who supported our dream over the years and helped us along the way. It has been an incredible journey. We’ve tried our very best, but we couldn’t quite get there,” he said.
In a statement provided to StartupSmart, a CSIRO spokesperson said the organisation had completed its Kick-Start project with Tomcar and received the news about the company’s administration with “great sadness”.
“It is with great sadness that we hear about this news from Tomcar. CSIRO and Tomcar collaborated between April-June 2017 under CSIRO’s Kick-Start program to undertake research into the feasibility of electrification of their off-road vehicles, and the outcomes from that research project were successful in delivering against their objectives,” the spokesperson said.
Brim added in a statement that the CSIRO Kick-Start program was “a positive experience for us”. “It allowed us to access research capabilities we would not have been able to through other means,” he said.
Potential ASX listing didn’t proceed
In February last year, small delisted Australian mining company UXA Resources announced it was entering a binding Memorandum of Understanding with Tomcar to progress the company into an ASX listing via a merger. It also stated it had invested $1 million into Tomcar as part of the agreement.
“Joining with UXA gives us access to financial markets, corporate expertise and their mining sector knowledge, which dovetails perfectly with our aspirations and forecast growth paths for our emissions free EV vehicle, that has already received significant interest amongst mining organisations,” Brim said at the time.
However, the ASX listing never went ahead, and no further information on the partnership is available. A Supreme Court of Victoria hearing list for November 16 last year lists a case between Tomcar and UXA Resources in the Commercial Court. StartupSmart understands court proceedings are still underway.
StartupSmart contacted UXA for comment and was told the deal between the two companies is “in abeyance”.
*This article was updated at 9.20am Friday, February 9, and at 9.34am on Monday, February 12.