MG Rover in Chinese deal

Trade unions have welcomed plans by MG Rover to forge a partnership with a large Chinese firm to produce a new range of vehicles. The Birmingham-based company plans to create a coalition with China Brilliance Holdings, China's largest producer of minibuses.

The move could result in the two companies jointly developing and manufacturing new products in the UK and China. It could also see both companies using each other's engines and setting a parts supply base.

Important collaboration

However the proposed agreement does not involve either company taking a financial stake in the other. If finalised, the alliance will be an important start in the series of collaborations that the motor industry believes Rover needs to survive. Tony Woodley, national officer of the Transport and General Workers' Union, described the alliance as a "great Christmas present" for the workers.

He said: "The fact that one of the largest Chinese vehicle manufacturers is linking up with MG Rover is extremely good news for both companies."

Controlling interests

In a statement, Rover said discussions with China Brilliance related to "the formation of a wide-ranging strategic alliance and cooperation agreement". It went on to say: "Several meetings have taken place but as yet no formal decisions have been taken.

"Further announcements will be made in due course."

China Brilliance Holdings is part of the Brilliance Group, which has controlling interests in several companies listed on the Shanghai, Hong Kong and New York stock exchanges. It is involved in car and component manufacturing in China and is the country's largest producer of minibuses, the world's fastest-growing automotive market.

Within China Brilliance Holdings are subsidiary companies with links, among others, to car giants BMW, Toyota, General Motors, Mitsubishi and Renault. MG Rover, which turns out MG and Rover 25, 45 and 75 models at Longbridge, was formed last year when BMW sold the old Rover company.

Last month, the company confirmed that it would be spending £300m on developing a new medium-sized car to replace the Rover 45 and MG ZS.