Roddy Graham, the firm's managing director, has been made redundant along with the majority of the nine staff at the firm's Bristol office. Operations have been transferred to Blackburn, where parent firm, Haydock Finance, runs a leasing brokerage business.
Ignition's current funded fleet, estimated to be 500 vehicles, will be managed until contracts have finished, but no new funded business will be written.
A spokesman for Haydock Finance said the decision to close Ignition was made because it was not meeting sales objectives for the first year.
However, the move has come under attack from sources close to the fleet operation who claimed major deals were in the pipeline that would have significantly increased the size of the company's fleet and that it was making a gross profit.
Graham, the former general manager of Budget Rent A Car, officially launched Ignition Vehicle Management in mid-2001 to provide a range of products including contract hire, finance lease and contract purchase.
The company's flagship product was i-Genesis, designed to assist the growing number of companies seeking a PCP and vehicle benefits package for employees.
Ignition had recently launched a string of new initiatives, including electronic vehicle procurement, and a partnership with commercial vehicle leasing specialist CCVS Cold Chain, itself a new leasing firm.
The closure will reignite debate in the leasing industry about the future role of small independent leasing firms and their ability to establish a foothold in a market dominated by superleague players backed by manufacturers and financial institutions.
Fleet News was unable to establish the continued role, if any, of Haydock Finance board member Richard Pepper, a well-known contract hire industry figure and former head of BCH Vehicle Management (now ALD).