A MANUFACTURER of London black cabs has revealed a £4m hole in its accounts and warned of mounting losses.

Coventry-based Manganese Bronze saw its shares plummet 34 per cent after saying it expected substantially higher losses for the first half of the year.

London black cabs took centre stage at the Olympics 2012 closing ceremony when the Spice Girls used them as part of their performance, but their manufacturer has struggled due to weak demand over the past few years.

The company, which is 20 per cent owned by Chinese car maker Geely, blamed the accounting mistake on its new IT system, which meant losses, dating back several years, had been understated by £3.9m.

The car maker has delayed announcing its half-year results until next month.

Manganese said a combination of "system and procedural errors" meant a number of transactions and balances were not transferred to the new IT system when it was introduced in August 2010.

The company

In 2011 it reported a 9.1 per cent drop in UK sales, although overseas revenues were stronger.

Manganese said it continued to trade at a loss as conditions remained challenging.

It predicted higher sales in the second half of the year, but said it was unsure if it would be on track for its full-year forecasts.

The company is due to introduce its new Euro TX4 taxi, designed to meet new environmental targets set by London Mayor Boris Johnson.

It faces competition from the likes of Japanese car maker

Nissan which has unveiled a diesel-engined taxicab, due to go on sale from next year.

Manganese Bronze made 1,500 black cabs for the UK at its Coventry factory last year, with another 705 purple taxis manufactured in China for the international market.

After winning an order to deliver 1,000 taxis to Azerbaijan in March

last year, problems in securing finance due to the eurozone crisis delayed the dispatch until January. The delay along with a drop in UK orders pushed the taxi maker into a £2.6m loss for 2011, down from £6.3m the year before.