LONDON (AFP) - Chinese company Shanghai Automotive Industry Corp. may be ready to step in to save ailing British car manufacturer MG Rover, a media report said.
According to British daily The Independent, Shanghai Automotive is ready to inject one billion pounds (1.8 billion dollars, 1.4 billion euros) into Britain`s sole remaining car maker as part of a new joint venture.
The deal, which would involve a 70 percent holding in the new company for Shanghai Automotive and 30 percent for MG Rover, was greeted by MG Rover head of international media Stewart McKee as a "tremendous opportunity" for both sides.
However, the company said details of the deal would only be made public when the project has received the go-ahead from the Chinese authorities, which is expected at the beginning of next year.
"What is certain is that we have started negotiations with Shanghai Automotive to enter into a wide-ranging strategic relationship," said McKee.
"We have signed those agreements in June of this year and both parties have been working hard on the detail of the relationship," he added.
He said the agreement included manufacturing, the joint development of products and the opportunity to build cars in both markets.
"We do need the final approval of the Chinese authorities in order to proceed and that`s the point at which the final details will emerge," he added.
Mckee told the newspaper the deal would make it possible for Shanghai Automotive to have more control over the development of their own products.
He said that for the past 20 years the company had been manufacturing under licence other people`s products such as GM and VW.
"That`s served them very well but strategically, Shanghai Automotive needs to develop their own models. This relationship allows them to do it," he said.
He added that MG Rover would get the opportunity to sell cars in China, which is an expanding market, and would be able to jointly fund the development of new products which he said was "key to the growth of business".
"It allows us to access a low cost supply infrastructure. For both parties it`s a very good agreement," he said.
MG Rover is in dire straits. The company racked up 64.1 million pounds in post-tax losses last year, with an operating loss of 123.8 million pounds. Once a leading light in British car manufacturing it now has just three percent of the domestic car market.
MG Rover was sold to a consortium of British businessmen for the symbolic price of 10 pounds by BMW in 2000 after the German company had invested 500 million pounds in an effort to make it work.
The head of BMW in Britain, Jim O`Donnell, last week denounced the owners of MG Metro as "the unacceptable face of capitalism" for reaping millions in payouts.
He said it was "disgusting" that five executives paid themselves millions last year while the company had stacked up such losses.
In October Shanghai Automotive acquired South Korea`s fourth largest car maker Ssangyong Motor, making the Chinese company the first Chinese firm to own a major concern in the world`s fifth-largest auto market.
11/20/2004 - 15:26 GMT - AFP