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The region’s business leaders have told Insider that the government needs to come forward with a strategy for the automotive sector “as soon as possible” in the aftermath of the administration of Coventry eco-van manufacturer Modec. Lord Kumar Bhattacharyya, head of the Warwick Manufacturing Group, said the government now needed to act on its pledge to support green technology. The  Manufacturing Advisory Service-West Midlands (MAS-WM) added that the company's collapse demonstrates “the continued vulnerability of automotive companies in the West Midlands”.

Modec collapsed into administration after suffering cashflow problems. According to reports, it is about £40m in debt. The company had signed an agreement with a US-based company to produce electric vans for American companies.

Despite expecting orders for thousands of the eco-vehicles, it is thought that only about 400 were placed.

Lord Kumar Bhattacharyya said Modec’s collapse into administration had been “very sad” news.

He told Insider he did now know the detailed circumstances of what had happened, but added: “The government has said it will support green technology and will come forward with a strategy for the automotive sector. I would urge them to do that as soon as possible and so put the car industry on the same footing as aerospace.

“But the government cannot support every company and were it to help any particularly firm would have to be convinced that it had a future.”

About half of the company’s 53 employees were made redundant when the company fell into administration. The Birmingham office of advisory firm Zolfo Cooper has been appointed administrator to the company.

The company had been the first to create a zero-emission commercial vehicle, as it blazed the trail for green transport.

Institute of Directors West Midlands chairman John Rider expressed his regret at Modec’s predicament, saying it was “a great shame”.

He said: “They did so well to get it to where they are and it is bitter-sweet that this should happen at a time of rising fossil fuel prices.

“It was a real achievement to be the first manufacturer to develop a zero emission commercial vehicle. But it demonstrates the fragile nature of start-ups which do tend to hit rocky patches especially with all the financial uncertainty around. And while they were at the forefront of cutting carbon emissions, and they had done the difficult bit, it is hard when you get to the ramp-up stage."

Rachel Eade, from MAS-WM’s auto division, said: “This is very sad news for everyone working at Modec and the firms that currently make up its supply chain. It demonstrates the continued vulnerability of automotive companies in the West Midlands, especially those investing in new technologies and driving what can often be new global concepts.

She added that MAS-WM hoped that Modec was acquired by another Midlands or UK company so that the IP, design and technology is reatained for future exploitation.

She said: “We must make sure we are the ones that benefit from the groundbreaking work already completed.”

Alan Durham, director of policy at the Coventry and Warwickshire Chamber of Commerce, said the news of the collapse was “very disappointing”.

He said: “They have the right kind of product for the 21st century economy and many had predicted a very bright future so this has come as something of a shock.

“They have a large supply chain in the UK, much of which is here in Coventry and Warwickshire. So we will have to monitor that effect on the local economy. We do hope a buyer can be found to take the company forward.”

In a statement on its website, Modec said: "On 4 March 2011, RK Grant, SJ Appell and AC O'Keefe of Zolfo Cooper were appointed joint administrators of Modec." No further information has been given.