Leslie Smith, 87, co-founder of the firm that created Britain's beloved Matchbox toy cars, which are still on the market and have become prized collectibles, died of cancer May 26 at his home in London.

Matchbox vehicles debuted in 1953 with a tiny gilded coach memorializing the coronation of Queen Elizabeth II. The early miniature vehicles sold for 49 cents. Now manufactured by Mattel, they cost about a dollar. Some early models, however, have sold for several thousand dollars each.

Born in Enfield, England, Mr. Smith was an export buyer before serving in the Royal Navy during World War II. After the war, he worked for a carpet firm and launched a small die-casting company with his boyhood friend Rodney Smith.

The unrelated Smiths called their firm Lesney Products, a combination of their first names, and set up shop in an abandoned pub.

The only toys they made were cap guns. Their major products were ceiling hooks, and engine parts and windshield wipers for Ford and Vauxhall.

During the Korean War, the fledgling company almost went out of business when the British government took over the supply of zinc, their principal raw material. Rodney Smith emigrated to Australia, and another childhood friend, Jack Odell, took his place.

It was Odell who began the Lilliputian toy line that would make company owners millionaires. When his daughter's school banned any toys that couldn't fit into a matchbox, Odell created a tiny steamroller for her to play with at recess.

The toy proved popular with the girl's schoolmates, and when the zinc restriction was lifted in 1952, Lesney was ready with the little gilded coach.

Still producing their hooks and machine parts, Mr. Smith and Odell made other three-inch-long toys in their spare time.

Far from the sleek Rolls-Royces that Matchbox would later market, the four original models were a dump truck, a steamroller, a tractor and a cement mixer. But by the mid-1950s, Odell was adding such items as an MG Midget TD, a Vauxhall Cresta and a Ford Zodiac.

In 1956, Odell began making his Models of Yesteryear -- with doors and hoods that opened and other details that created collectible replicas of early-1900s cars. In 1969, to compete with Mattel's speedy Hot Wheels line, Matchbox introduced its Superfast dragsters and sports cars.

The company's quality craftsmanship, variety and low prices produced an internationally successful product. By the 1960s, Lesney had 13 factories and a staff of 6,000 churning out a million Matchbox cars a day.

While Odell concentrated on the models, Mr. Smith specialized in international marketing and labor relations. He believed women were the best toymakers, and to encourage them, he arranged double-decker buses to drop off and pick up their children from school.

To maintain the exacting quality and precise detail that made Matchbox famous, Mr. Smith struggled to keep his manufacturing operation in Britain, rather than moving it to Asia, where cheaper labor was available. But international competition compelled him to sell out to Universal Toys in 1982. That company was later acquired by Tyco Toys, which merged with Mattel in 1997.

After leaving the toy business, Mr. Smith worked in school administration.

In 1998, the British Toy & Hobby Association gave Mr. Smith a lifetime achievement award for his positive and lasting contributions to the toy industry. He had served as president and chairman of the organization.

His wife, Nancy, died in 1969. Survivors include three children; a sister; and nine grandchildren.