Directors at the Ken Thorne Group had announced a "temporary suspension" in trading after premises across the group closed without warning on Friday.
But it has now been decided that it is not possible to resume trading, and receivers Deloitte and Touche have been called in.
A spokesman said customers would be contacted by the receivers.
Mr Thorne and his family have said they are "very sad" that the business could not be saved, and paid special thanks to the "loyal employees who now face an uncertain future".
Last week, workers at Ken Thorne World of Cars were stunned when they were told to leave the showrooms.
In a statement released on Monday afternoon, the company said "cash flow pressure" had prompted the sudden closure, after bankers were "unable to extend facilities any further".
The directors claimed the company was not insolvent and that its assets "exceed liabilities".
The statement followed days of speculation as to the situation within the Ken Thorne Group, after doors remained locked at premises and nobody from the company would make any comment.
Sudden meeting
Employees said they were called to a meeting at 1630 BST on Friday where they simply told to get their things and leave.
On Monday they were back to find out if they would be paid but could get no response.
Over the weekend at one Cardiff showroom, the forecourt had been stripped of cars and remained closed. Door remain locked on the company's garages across south Wales.
The car empire has a £120,000 sponsorship deal with Cardiff City Football Club but it is not clear if the deal would be affected by these developments
High-profile Cardiff businessman Ken Thorne - a former world powerboat champion - had created one of the region's best-known brands using a mix of modern car sales techniques and US-style marketing savvy.
According to the company's website, sales at World of Cars - one of five divisions - was directed by eldest son Nigel, 35, whilst youngest son Chris, 28, ran its Hadfield Road showroom.