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Last Updated: Wednesday, 20 April, 2005, 16:33 GMT 17:33 UK
Rover cars to be made in China
Rover 75
Made in China? SAIC owns the design rights for the Rover 75
China's largest car maker, Shanghai Automotive Industry Corporation (SAIC), is set to build Rover cars in China.

Officially the company says that no decision has yet been made, but sources close to the company have told the BBC that the plan is likely to proceed.

The Rover brand name belongs to BMW, but the Chinese are confident they can secure the rights to call the Shanghai-built cars Rovers.

SAIC last week pulled out of a last-ditch rescue deal for MG Rover.

Rover went into administration when the deal collapsed with the loss of 5,000 jobs.

SAIC has already approached Rover component suppliers looking to buy parts to build the Rover 75 in China, the Birmingham Chamber of Commerce and Industry said. It added that it was unclear who owned the rights to the tooling of the 75.

Still hope?

The news that SAIC may start production in China follows claims by former Rover boss John Towers that a rescue deal could still be put together with SAIC.

Mr Towers is one of the so-called "Phoenix four", the owners of Phoenix Venture Holdings who took control of Rover in 2000 after BMW decided to pull out.

Shanghai Automotive Industry Corporation (SAIC) has become a global giant to be reckoned with.

Mr Towers' comments came despite SAIC's continuing insistence that it does not want to buy the firm.

Plans to produce the Rover 25 and 75 models in China would not indicate that such a deal is in the offing as SAIC already owns the intellectual property rights for these models following a deal with MG Rover last year.

SAIC, which wants to develop its own cars, does not need to make any further acquisitions to get production of these two models off the ground.

Too optimistic?

It is understood that SAIC, and others, have made approaches to the administrators of MG Rover about the possibility of buying equipment from the Longbridge production lines.

BBC business editor Jeff Randall said that SAIC was unlikely to come to Rover's rescue.

"John Towers' view that Rover car production can be salvaged at Longbridge seems to be yet another example of his optimism triumphing over commercial reality," he said.

Banner hanging outside of Rover's Longbridge plant

Explaining the course of events that led to the collapse of Rover and 5,000 job losses, Mr Towers insisted that the company was 20 minutes from securing a rescue package.

Mr Towers also tried to reassure workers facing redundancy about the state of the firm's pension fund.

He said that the company had made efforts to curb a pensions deficit, which had widened to 49m, and that despite recent reports that the size of the shortfall had increased, it should be possible "for people to have their pensions in the future".

On Wednesday, PwC announced that eight more European subsidiaries of Rover have been placed into administration.

The companies liaise between Rover and carmakers' dealerships in Germany, the Netherlands, Italy, France and Ireland.


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