MG Rover's drive for sporty image

MG Rover, the loss-making UK car manufacturer, has bought the US-Italian sports car maker Qvale Automotive.

The company, famous for its Mangusta sports car, employs just 70 people at its factory in Modena. Qvale's chassis and V8 power train will form the basis of a new MG car, code-named X80.

The new car - available as a roadster and coupe - will be launched in 2002, and was styled by MG Rover's design director Peter Stevens. However, MG Rover will not have access to Qvale's dealership network in the United States, and does not have the rights to the Mangusta brand and design either.

The future of the Italian car is uncertain. But basing the X80 on the Mangusta will allow MG to break into the US market, because the car from Modena meets US safety standards - unlike all other cars produced by MG Rover.

Rover's chief executive Kevin Howe said the MG X80 would be "an excellent fit at the top of our family of MG cars", and would open up the world's largest sports car market to develop the "full potential for the MG brand". Financial details have not been disclosed, but the deal is not expected to be a serious drain on MG Rover's estimated £500m cash reserves, which the firm received from its previous owner, BMW of Germany.

MG Rover is believed to have been in talks with Qvale's San Francisco based family owners for several months. Bruce Qvale, president of Qvale Automotive Group, said: "MG Rover showed interest in our Mangusta car project in Modena and we have agreed a good deal for both sides.

"The power of the MG brand now takes the project forward on a global basis." MG Rover is reported to have been losing £1.2m a day, but has said it expects to move into profit in 2002. In May German car maker BMW completed the break-up of the Rover Group and sold its engine manufacturing plant at Longbridge, near Birmingham.

Powertrain Ltd, valued at £150m, was transferred to MG Rover, which bought the Rover brand from BMW for a nominal sum in May last year. The sale marked the end of BMW's troubled association with MG Rover. The group now produce engines and transmissions for itself and third party customers.