The troubled London black cabs maker Manganese Bronze suffered another blow yesterday as it was forced to recall 400 of its latest model and suspend new sales after finding a defect in the steering.
The company said the suspension of sales "will have a very material and detrimental impact on the group's cash flows." It added: "Until such time that a technical solution is developed to rectify the fault, the financial position of the group remains unclear."
Manganese shares were suspended on the stock market. It said it was working with its Chinese partner Geely "to put in place a robust technical solution" for the defective part.
Manganese said the steering box came from a new supplier and was installed in new TX4 cabs from late February this year. Four years ago Manganese was hit by the recall of 5,000 of the early models of the TX4 after a number of them caught fire. That cost was almost £4m.
Last month the 64-year-old manufacturer said revenues dropped 11 per cent in the first half of the year, and revealed that problems with its IT system had produced a surprise £4.25m of extra losses spread over the last two years. It made a first-half loss of £3.6m and the chief executive, John Russell, said he did not expect the company to return to profit in the second half on the basis of current sales.
Manganese has not made a profit since 2007 as it struggled against a declining market for black cabs and the rise of the rival Mercedes Vito cab, which recently claimed 38 per cent of the London market.
The shares, suspended at 10p, have fallen 70 per cent in the past 12 months.