LOLA Cars has called in administrators.

The Huntingdon-based racing car manufacturer issued a statement this morning (Wednesday) saying: "The latest economic downturn and the decision of HMRC not to pay ongoing research and development tax credits has caused a serious cashflow problem for the businesses.

"It is with enormous regret that a decision has been taken to issue notices of intention to appoint an administrator to Lola Cars International Limited and Lola Composites Limited. This step allows the board to continue its discussions with possible investors and prospective purchasers with a view to securing the best outcome for the staff, creditors and customers of both businesses."

Lola Cars International Ltd was formed in 1958 and is currently owned Martin Birrane.

As well as making racing cars from its site in St Peter's Road, the company also makes composites, offering a design and engineering service to the aerospace, defence, communications, automotive and marine sectors.

The company added: "In recent years, significant investment has been made in technology and capability in the motorsports business as well as diversifying and creating Lola Composites Limited."

Huntingdon MP Jonathan Djanogly offered his help and support to Lola and its staff.

He said: "Lola is a long standing and important part of the Huntingdon business community and is an internationally recognised brand. I have just heard this unfortunate news and I have asked to receive further information from management.

"I have offered to provide whatever help I can to Lola and its highly qualified and loyal staff during what looks likely to be a sale process."

The Lola board has declined to make further comment until Monday (May 21).