MG Rover, Britain's last independent volume car-maker, yesterday raised renewed fears over its future by selling off most of its Longbridge site near Birmingham.

The group said it had entered into a sale and lease deal with St Modwen Properties for 228 acres of the 248 occupied by the car factory that would net it £42.5m.

Rover, hit by a row with unions after revelations late last year of special pension fund arrangements for its founder directors, is expected to announce a fur ther drop in sales in 2003 today. In November, sales fell 32% to 4,300 in the UK, giving the loss-making group a market share of only 2.5% compared with the 4% deemed essential to ensure viability. Its share of a market expected to reach a new annual record of 2.57m is likely to be just over 3%.

Kevin Howe, the chief executive, said the deal with St Modwen "generates cash for our cars business today and allows us to continue to invest in the car company's many product development activities. It puts to work one of our assets but in no way restricts the day to day running of our business." His aides said the deal, an initial 35-year lease with a renewal option, was a traditional way of releasing value from land assets and developing funds for investment.

But it emerged that Rover is still seeking a "collaborative" partner to develop its new medium-sized car, which is critical to the group's future and whose launch has been delayed until next year. Rover lost its chosen partner, China Brilliance, in late 2002 and last year TWR, its engineering design partner, went into administration, leaving it desperate for another to inject equity into the replacement for the R45 and R25. The group, which lost a further £95m in 2002, has been unable to complete a deal to acquire a surplus Daewoo factory in Poland to provide a low-cost entry to the mainland European market.

With the final instalment of the £500m cash dowry from former owner BMW already paid, Rover has been resorting to property sales to raise extra funds.

Last year it sold 60 acres of surplus land for business and housing through a two-stage deal with St Modwen which brought in £16.8m. It now retains 20 acres of the Longbridge car plant site and 186 acres of the adjacent Powertain engine site.