Manganese Bronze, maker of London's black taxi, said it is set to appoint administrators after failing to secure funding needed to survive, putting hundreds of British jobs at risk.
Manganese Bronze, whose taxis have been on British streets since 1948, had been in talks with its largest shareholders, including China's Geely Automobile Holdings Ltd, to secure a last-minute bailout.
"The issue here was not a lack of opportunity around the quantum of support being offered," Chief Executive John Russell told Reuters on Monday. "It was around the ability of Manganese Bronze, a company with a very weak balance sheet, to take on the level of debt required."
Russell said the company had discussed an injection of "tens of millions" of pounds with parties including the company's two largest shareholders, Geely and Toscafund Asset Management.
Accounting firm PricewaterhouseCoopers is set to be appointed as administrator.
Earlier this month, the company had said its financial position was unclear after the discovery of a safety defect in its new TX4 model that led to a recall of 400 taxis and a halt to sales.
The recall was the latest in a spate of issues that have plagued the taxi maker which coincided with market share gains by rival Eco City Vehicles's Mercedes Vito taxi. Japan's Nissan Motor Co Ltd is also due to launch its own taxi in Britain.
Manganese Bronze, based in Coventry, in central England, has failed to turn a profit since 2007. It suspended trading in its shares earlier this month.
"It's a great shame, because they (Manganese Bronze) build the best cab in the world, but it's no surprise. They never listened to the drivers," said Michael, driver of a Manganese cab in the capital for 30 years. He pointed to the cost of the vehicles (at least 37,000 pounds per car), high maintenance bills and a lack of after sales support.
"They took it for granted, were too complacent, thought we'd always go back to them and buy another cab but the drivers aren't doing that anymore."
Britain's Unite union called on the British government to support the firm and protect the 300 UK jobs at risk.
"We're hopeful that somehow or another somebody's going to be able to resurrect it, either the liquidators or someone's going to come in and take it over," said Steve MacNamara, general secretary of the Licensed Taxi Drivers Association.
"We're concerned because the black cab is a great iconic part of London."
As well as technical difficulties, Manganese has been hit by a weak economy and delays in fulfilling key orders. Manganese Bronze sold 1,502 taxis last year, 9 percent fewer than in 2010.
Earlier this year, it found a 3.9 million pound hole in its accounts causing a delay to the release of its half year results. They were eventually published late last month with the firm reporting a pretax loss of 4.6 million pounds on sales 11 percent lower than the same period a year ago.
Russell said it was still "in dialogue" with Geely after talks over funding broke down last week. "Geely will be involved in the process of administration and they will make their decision to be a part of the outcome," said Russell.
($1 = 0.6241 British pounds)
(Additional reporting by Natalie Huet and Sarah Young in London; Brenton Cordeiro in Bangalore; Editing by Supriya Kurane and Jane Merriman)