Shares digital

After the appointment of new CEO Andrew Walmsley, hybrid engines developer Traction Technology (TRAC:AIM) will start lobbying against a fuel subsidy that the company says puts up barriers to the commercialisation of its products.

The company announced the appointment of Walmsley last month, as former CEO Bob Dover became non-executive director. Traction’s new strategy is to raise awareness about the so-called ‘bus service operators grant’ (BSOG), a government subsidy that allows bus operators to recoup the cost of diesel fuel.

Traction, which especially targets the bus sector, reckons the subsidy makes the penetration of its hybrid engines products more difficult. The company says bus operators are less keen to retro-fit their buses with hybrid engines as the savings coming from hybrid engines are less attractive due to the presence of the BSOG.

This situation applies especially to regional bus operations, while in London mayor Ken Livingstone has pledged to have the city’s 8,000-strong bus fleet completely run on hybrid engines by 2012.

Last month, Traction struck a deal with Merseytravel, Merseyside’s bus operator, to which it will supply four hybrid buses developed with its partner Optare in 2008. The buses, powered with a supercapacitor power pack, have passed a competitive trial evaluation carried out by Merseytravel, and Traction says this contract win puts it in a strong position for the trials that are to begin by the end this year for London’s hybrid bus fleet.

The company’s shares peaked last year at 56p in July but fell more than 50% to the current 23.25p in the following months.

Shares says: Success in the London trials could boost the company, but profitability is some way off.