The maker of London's world famous black cabs is to appoint administrators after failing to raise the cash it needs to save the business.
Manganese Bronze was said to be in talks with Chinese shareholder Geely, which owns 20 per cent, to pump £15m into the flagging firm, but yesterday said it was unable to secure funding "on acceptable terms" and could not continue as going concern.
The cash crisis was triggered by a recall of 400 of its TX4 London taxis and the suspension of sales after it discovered a defect with its steering boxes, introduced in production from a new Chinese supplier at its Coventry factory in February.
Manganese uncovered the fault after two cab drivers reported problems with steering, although there have been no crashes or injuries as a result.
Manganese, also under pressure from competitors like Nissan and Mercedes-Benz who are pushing into the market, warned that the recall and sales suspension would have a "material and detrimental" impact on its cashflow.
The company, whose London Taxi Company division makes about 2,700 cabs a year and has produced more than 100,000 vehicles since it started in 1948, has been loss-making for the past four years.
The company added that a "speedy resolution" of the product recall remained a top priority for the group, which is urgently contacting drivers of the 400 affected vehicles to make sure they are taken off the road.