MG Rover, the independent car group, insisted yesterday that its joint venture with a Chinese partner to develop a new medium-sized car for the European and Asian markets was still intact despite a flurry of reports casting fresh doubt on the deal's future.
In Hong Kong, Brilliance China Automotive Holdings, the country's biggest van-maker, said neither it nor its units had ever been involved in any talks or entered any joint venture with Rover - nor paid any money to the UK group.
It also confirmed that a provincial government, in Liaoning, in the north-east of the country, was in talks to take control of Brilliance China by buying the 39.45% stake held by an education foundation.
This, in turn, was until recently controlled by Yang Rong, the company's chairman who has fled the country, probably to the US, after being accused of asset-stripping. He has professed his innocence.
Analysts insist that the Chinese group, whose shares were suspended on Monday and resumed trading yesterday, would preserve its alliance with BMW, the German car-maker, but pronounced a deal with Rover effectively dead.
But the loss-making British group, struggling to maintain sales and critically dependent on the new medium-sized car due to go on sale in 2004 to restore its profitability, insisted its joint venture was with a separate, unquoted part of the Chinese conglomerate which is listed in Hong Kong and New York.
Senior Rover officials said the company had an alliance with China Brilliance Industrial Holdings which it was simply monitoring. But there was no need to review the deal following talks three weeks ago with the Chinese unit's chairman - a different individual from Mr Yong or his successor, Wu Xiaoan.
They added that the Chinese venture was not central to Rover's development of the new medium-sized car. "We can do it [the car] from resources we generate in the UK and Europe and don't need a partner to carry out our five-year plan for restored profitability."
The Chinese unit has so far, according to Rover executives, paid the UK group £150m as a first tranche towards the purchase of intellectual property rights on Rover designs.
China, with 16m cars in a population of 1.3bn, is the world's fastest-growing auto market and Rover's joint venture envisages new models based on its own range for the local market, shared engine development, joint research into new models and co-ordinated purchasing agreements.
"It's a very good opportunity for MG Rover to add incremental value to its business," the officials said, pointing to separate plans to develop a new small car with Indian group Tata and to purchase a disused Daewoo plant in Poland.
Separately, Volkswagen, Europe's largest carmaker, said it would invest 2.9bn euros in new models produced by Chinese joint ventures for the local market over the next five years.
These sums are on top of 33.3bn euros earmarked for global investment by the German group between 2003 and 2007.
VW, whose sales in Europe are faltering, said 67% of the planned investment would go to German-based units compared with 60% earmarked under an earlier plan.
