SHANGHAI Automotive, the Chinese car group that last week triggered an election crisis for Labour by pulling out of a rescue deal for MG Rover, believes it has taken possession of the iconic Rover name as the result of an earlier agreement with the stricken British group.

The assertion, by sources close to Shanghai Automotive Industry Corporation (SAIC) and confirmed last night by leading City figures, is likely to cause consternation among the administrators and government officials struggling to keep MG Rover alive, robbing them of a valuable asset.

An MG Rover spokesman insisted yesterday that the Rover brand was still part of the group, while BMW said it had control of the marque, having allowed MG Rover to use it under licence free of charge.

But the SAIC source maintained it took possession in a £67m deal last year. SAIC now controlled the Rover brand, its K-series engine, and the intellectual property behind the Rover 75, its most up-to-date car. Other reports say SAIC also has the rights to the Rover 25. If the brand move is confirmed, SAIC could build Rovers in China.

The Chinese group withdrew on Wednesday after deciding MG Rover’s finances were too shaky. After the appointment of administrators on Friday, MG Rover now looks set to close with the loss of 6,000 jobs at the plant and thousands more among suppliers, a serious problem for the government ahead of next month’s general election. Tony Blair, Gordon Brown and trade and industry secretary Patricia Hewitt went to Birmingham on Friday in an attempt to reassure workers.

Blair said he had not lost hope of a deal with China. Officials are hopeful of finding a buyer for the MG TF sports-car line — in which SAIC has shown no interest — and the rest of Powertrain, an engine and gearbox business. This could save more than 1,000 jobs.

SAIC could buy some of Rover’s other assets out of administration. Its spokesman said last night that this had not yet been considered.

Jon Moulton, chairman of Alchemy, the private-equity group that failed to buy Rover five years ago, said the company’s production lines could now be sold to the Chinese “by the yard, plus one pound”. Moulton said Rover’s collapse was a moment of “genuine sadness”.

Price Waterhouse Coopers (PWC)has been appointed to two companies, MG Rover Group and Powertrain, which are part of Phoenix Venture Holdings, the vehicle used by the “Phoenix Four” — John Towers, Nick Stephenson, Peter Beale and John Edwards — to buy Rover.

Ian Powell, one of the three joint administrators, said PWC would spend the weekend putting together a picture of the company’s financial position. It would look at other Phoenix companies as part of its inquiries.

PWC will also prepare a report on the conduct of MG Rover’s directors, who have faced harsh criticism over their handling of the group, and charges that they enriched themselves while its fortunes plummeted.

Meanwhile, City experts warned last night that Rover’s pension-fund deficit could reach £400m, not £70m as indicated in its most recent accounts. The scheme for employees has assets of £280m.

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