MG Rover, the ailing car company, today confidently predicted profit in 2002, despite reporting a loss of £254m for the eight months to December 31 2000.

The carmaker, whose recent decline reflected a wider slump in Britain's car industry, is pinning its hopes on a host of new models that could lead to smaller losses this year and the company breaking even in 2002.

"Our 2000 performance was better than our business plan in all respects and represents a major step towards our target of overall business profitability," said the chief executive, Kevin Howe. "We reduced by more than half the operating loss of the business, consolidated our production on the Longbridge site and entered new overseas markets."

Led by former Rover executive John Towers, Phoenix Consortium bought Rover last May for a nominal £10. German car giant BMW was anxious to dump the loss-making company, which had been dubbed "the English patient" in Germany. The company began trading under its new name, MG Rover, in May last year.

MG Rover hopes to produce an average of 200,000 units a year over the next five years. The figure for this year is likely to reach only 180,000, but the 2002 total is expected to exceed 200,000.

The company has introduced an estate version of its top-of-the-range Rover 75 saloon and is bringing out four new MG sports models. MG Rover has also acquired the US-Italian sports car group Qvale Automotive and has announced that this will lead to the production of a super MG - the X80 - next year.

Tony Woodley, national officer of the Transport and General Workers Union, said he believed the company was on track to return to profitability.

"Critics within the industry and the media have been confounded by the company's performance," he said. "T&G members at Longbridge have played their part and will continue to do so because we know the challenges the company still faces to return to profit."

The Phoenix consortium decided to add MG to the Rover name to capitalise on Rover's popular MG brand. Over the years, the company that became Rover has traded under such names as the British Motor Corporation, British Leyland, BL, and Austin Rover.

MG Rover currently employs around 5,500 staff and is aiming to produce an average of 200,000 vehicles per year over the next five years. In its last full year of BMW ownership, Rover lost more than £600m. In June 2001, MG Rover sold 6,916 cars to take a 3.21% share of the UK new car market.

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