Rover pins future on China

MG Rover will unveil pre-tax losses this week of about £50m as it struggles to survive in the British car market.

The losses are down from £95m for the previous year, but sales fell to 144,000 last year, compared with 200,000 when it became an independent company four years ago. This year, about 100,000 vehicles are expected to be sold.

The company, which employs 6,000 workers in the Midlands, is pinning its hope for survival on links with the Chinese stateowned motor giant Shanghai Automotive Industry Corporation.

The Chinese government's go-ahead for the link is expected to be announced in December and this will be the catalyst for a surge of investment in new models.

The problem for Rover has been its failure to develop a new car as rivals bring fresh models to the market. It has been forced to sell its valuable parts business. And development of the Rover 45's replacement was halted while talks took place with the Chinese.

The joint venture will not only provide access to finance, but give Rover a shot at the booming Chinese market.

It also gives China access to Europe, Rover's dealer network and its engineers.

The first results of this cooperation will be a new mid-range car produced in Longbridge, Birmingham, and Shanghai in 2006.