THE Chinese car groups that scrapped over the remnants of MG Rover are close to a deal that will clear the way for the British cars to be built in China.

Senior motor-industry sources say that Nanjing Automotive and Shanghai Automotive Industry Corporation (SAIC) have agreed an arrangement that the former will build Rover engines and small cars, while the latter will make the larger and more modern Rover 75.

The two groups were at loggerheads during the protracted bidding for MG Rover, which collapsed in April. The UK firm was put up for sale by administrator Price Waterhouse Coopers. Nanjing finally triumphed in July, paying £50m for MG Rover’s assets.

But SAIC already owned much of MG Rover’s intellectual-property rights after buying them for £67m during earlier joint-venture negotiations.

SAIC was particularly keen on buying MG Rover’s Powertrain plant, which makes engines and gearboxes.

That went to Nanjing in the sale, despite SAIC claiming to own the intellectual rights to most Rover engines. SAIC was faced with having to build its own engine plant to exploit the designs, a process that could have cost about £200m.

Senior sources now say that SAIC and Nanjing have reached an outline deal that will resolve their competing claims. Nanjing will build the Rover engines for SAIC to use, and will be allowed to use the designs for the Rover 25, a small saloon car. SAIC will build a stretched version of the Rover 75, a larger saloon.

Nanjing could not be contacted for comment yesterday. Sources close to SAIC said it still had plans to build its own engine plant if necessary.

Last week Nanjing began shipping equipment from Rover’s Longbridge production base to China. It is believed that the machines being moved were from the Powertrain operation.

Nanjing is still in negotiations with GB Sports Car Company, its British partner, about the possibility of restarting production of some cars in this country. SAIC, which has ambitious plans to become a global carmaker, is still examining whether it could start car assembly in Britain.

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