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Midnight Club was cancelled by Rockstar because it wasn't GTA
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Midnight Club was first released in 2000 and, despite its popularity at the time, was given second-class treatment when compared to GTA.
Former Rockstar senior designer Kris Roberts worked on the Midnight Club series while at Rockstar San Diego.
Around his departure from the studio, the team was still working on Midnight Club 5, and maps were being developed.
He called part of the reason for cancellation, “non-trivial conflict” between Rockstar New York and the San Diego team working on Midnight Club.
Seems like Rockstar Studios did not deem Midnight Club to be a worthy franchise even after four instalments, and thus the team was dismantled.