THE troubled maker of famous London taxis has been thrown into further turmoil after it announced plans to recall 400 black cabs and suspend sales after discovering a steering box fault.

Manganese Bronze said it had discovered a defect with new steering boxes in its TX4 models, which were introduced in production at its Coventry factory in late February.

It warned that the recall and sales suspension would have a “material and detrimental” impact on its cashflow and said it was looking at options for the firm.

The news comes as the latest blow to the company, which has been hit by mounting losses and a recent accounting blunder that left it with a £4m hole in its finances.

Manganese, which suspended trading of its shares yesterday, said it was working with Chinese partner Geely to fix the steering box fault.

Manganese said it discovered the fault after two cab drivers reported problems with steering, but stressed there had been no crashes or injuries as a result.

The group is urgently contacting drivers of the 400 affected cabs to make sure they are taken off the road.

John Russell, chief executive of Manganese Bronze, said: “We know that, in certain circumstances, the fault can result in a safety risk to drivers and their passengers. We’re taking this action to make sure no one is at risk.”

The group will work with drivers to help limit the impact on their businesses, but admitted it will be difficult for those affected given a current shortage of rental replacement vehicles.

Russell said the group was working on fixing the fault as a priority and would deal with the “commercial consequences“, including possible compensation for affected drivers. The group is expecting a hefty bill from the fault and said it was now looking at all options, including possible administration.

Manganese has been loss-making for the past four years as its London Taxi arm has been hit by a consumer spending slowdown and increased rivalry from competitors, such as Eco City vehicles.

It slumped deeper into the red in the six months to June 30, with losses of £3.6m against £2.4m a year earlier.

The group’s London Taxi Company division makes about 2,700 cabs a year and has produced more than 100,000 since it started in 1948.