BMW had said that it intended to appoint another Briton after the unexpected resignation of John Towers as chief executive in May. Instead it has given the job to Dr Walter Hasselkus, who currently runs BMW's motorcycle division.
A Rover spokesman said: "We did begin a search in the UK for a replacement but BMW decided that the position called for someone with a wide range of skills in international sales and running a large manufacturing operation. It came to the conclusion that the person it was looking for was under its nose.
"Dr Hasselkus can also take over very quickly, whereas a more extensive search would have taken longer."
The British candidates were thought to include Chris Woodwark, a former Rover executive who is now managing director of luxury car-maker Rolls- Royce, and Ian Gibson, the managing director of Nissan's Sunderland factory.
The appointment of Dr Hasselkus strengthens the German stranglehold over Rover's top management. The Rover chairman, Dr Wolfgang Reitzle, is also a BMW board member.
Rover denied, however, that the management changes would lead to Rover being subsumed into BMW and disappearing as a distinct marque.
Motor industry observers expressed surprise that BMW had been unable to find a suitable candidate within these shores, pointing out that General Motors appointed a Briton, Nick Reilly, as chairman and managing director of its UK subsidiary, Vauxhall, in April, while the chairman of Ford in Detroit, Alex Trotman, was a Briton.
There was speculation that BMW had found difficulty finding a British chief executive for the same reason that Mr Towers decided to quit the job - the lack of a free hand now that Rover is one more subsidiary of a larger car group.
Dr Hasselkus, 54, is familiar with the British motor industry, having been president of BMW (GB) between October 1980 and March 1984. He began his career with the lighting group Osram and joined BMW in 1976, working in its corporate planning division. During his 20 years with the group he has also been president of BMW South Africa and head of Central European Sales.
He joins Rover at a time when its share of the UK car market continues to slip while worldwide sales rise. In the first five months of this year, total sales were up 8 per cent at just over 200,000 compared with a share of the UK market which has remained flat at just under 11 per cent.
Last year Rover suffered a loss of pounds 148m under German accounting rules, which allow depreciation to be written off against profits immediately, but an operating profit of pounds 92m under British accounting standards.
The next model due out from Rover is a small Landrover designed to compete with the Toyota Rav 4 and other Japanese four-wheel drives. The car will appear next year and is one of the largest elements in a pounds 1bn investment programme for Rover sanctioned by its German parent.Reuse content