The Coventry firm, which recently announced a £10 million share placing, said it would concentrate on improved aftersales rather than continuing to work with dealers in its London Taxis International UK franchise.

Chief executive John Russell said the company had issued 12 months notice to the affected dealerships.

The group has focused on foreign markets since establishing a joint venture with Geelys in China in 2006.

Mr Russell said: “These changes are designed to ensure drivers throughout Britain have easy access to new and used LTI products along with excellent aftersales care provided by a local service dealer who is trained and equipped to maintain our vehicles to the high standards our customers deserve.

“Following our successful £10 million fundraising in June, we will be investing in further direct sales sites in order to deliver on this promise.”

The group said the changes were needed because of the “evolution of the UK taxi market” and said it would enable a value for money offer. Meanwhile, the firm is in the search for lucrative new markets after sales dropped catastrophically over the last year.

The group posted a £5.4 million loss in 2008, compared to a £5.6 million profit for the 17 months before, after seeing sales drop to £77.2 million. Its net debt had risen to £7.2 million by the end of the period, compared to £3.2 million net cash in January 2008.