Chinese takeover of Rover signals end of Britain's once-thriving car sector

£1bn deal puts seal on a century of manufacturer's production of the country's best-loved - and most loathed - cars

After a century producing some of Britain's best-loved - as well as its most-loathed - cars, Rover yesterday confirmed a takeover deal by a Chinese state-owned company that marks the passing of Britain's last major motor vehicle manufacturer into foreign hands.

After a century producing some of Britain's best-loved - as well as its most-loathed - cars, Rover yesterday confirmed a takeover deal by a Chinese state-owned company that marks the passing of Britain's last major motor vehicle manufacturer into foreign hands.

Yesterday leading motoring enthusiasts came to praise Rover and to bury it. The firm is likely to be sold for £1bn to the Shanghai Automotive Industry Corporation (SAIC) in a deal to be completed - once Chinese authorities give approval - in January. When the Rover Cycle Company began making cars in 1904, China was still ruled by the 270-year-old Qing dynasty and was 50 years away from industrialisation.

Yesterday John Towers, the much-criticised chairman of MG Rover, said he was confident that the deal would be secured and that Longbridge, the last British-owned production line, would remain in British hands. He told the BBC: "All the work associated with the joint venture is going on - the funding, the provision of people, the engineering, the development - they are happening."

The former transport minister and used-car dealer Steve Norris said it was an inevitable consequence of the global economy that Rover should move east.

"Quite frankly, Rover is looking like a basket case," he said. "They've had appalling problems. Setting aside how much the directors have taken out of the business, the underlying business was dire. It has a history of appalling cars: the Maestro, the Allegro. One of the worst was the SD1, you were lucky if you got it from the showroom to the edge of the forecourt."

The racing driver Johnny Herbert said it was a "shame" that there would no longer be a British-owned volume car manufacturer. "It is sad," he said. "It always seems that in this country the investment is not there. Our motor industry used to be one of the biggest in the world. We had a chance 40 or 50 years ago, but the Germans had the technology and after the war had the investment.

"My favourite Rover was the BR4 rally car, and there was the MG we had at Le Mans a couple of years back. The worst, well I had a Montego once. It was horrible."

The comedian Alexie Sayle, who drove a 1970s-era P5B Coupé for six years in the 1980s, said he'd add the Marina to the list of turkeys.

"The P5B coupé looked great," he said. "It was a nice drive. I think it's a shame it is leaving British hands, but inevitable. It has not been well run and makes some strange decisions, such as the City Car made by Tata in India. Rover has a history of buying a shitbox, sticking a bit of wood on it and selling it for three grand too much."

Now, the firm is set to merge with SAIC. The deal, which will see SAIC own 70 per cent of the new firm, should safeguard the loss-making company's future and 6,000 jobs.

In return, SAIC will pump £1bn into the struggling company to launch a desperately needed new range of models, vital if the firm - which lost £77m last year - is to survive.

Around 200,000 cars would be made at Rover's Longbridge plant in the Midlands. Currently, about 120,000 cars each year are made at the plant, which is not enough to compete with mass-volume manufacturers like Ford, which has a 15 per cent share of the UK market. MG Rover has a 3 per cent share, which is shrinking.

This weekend Nick Stephenson, one of the four businessmen who bought the company from its German parent BMW in 2000 for a token £10, was in Beijing to continue talks with officials from the Chinese government, which has yet to approve the deal.

MG Rover said that many details remain to be decided, and that the Chinese government could still decide to block the deal.

The firm is one of the most famous brands in Britain - not least because of its ups and many downs over the years. It has lurched from crisis to crisis and produced cars of such poor quality they have become a national joke.

In Longbridge yesterday, reaction was mixed. Paul Winwood, a local estate agent, said: "If a Chinese takeover means securing local jobs it can only be a good thing. One of the reasons I brought my business to this area was planned regeneration of an old area of the Rover site into a business park.

"The takeover can only have a positive effect on the housing market here, and that increased prosperity will help the local community substantially."

Peter Jones, a salesman who lives and works locally, said: "The company and the area needed a boost, but I'm concerned that the Chinese could easily do what BMW did.

"The Government should have invested to keep the firm British, so that people's jobs and lives have some security.

"This really is a big development, though. The whole community relies on Rover, it has to stay alive one way or another."

Additional reporting by Oliver Luft

How SAIC dominates China's vast car market

By Jasper Becker in Beijing

The Chinese firm poised to buy MG Rover is China's largest and most profitable car maker, and dominates the vast country's rapidly growing automotive industry.

Despite being state-owned, Shanghai Automotive Industry Corp (SAIC) sold 600,000 cars last year - more than four times the number sold by its more famous new British subsidiary.

SAIC started out in the 1980s as an unlikely joint venture with the German car giant VW, and has ambitious plans to become the world's sixth largest car maker - ambitions it seems well set to achieve.

With its rapidly expanding private-sector economy and an influx of foreign investors, China is probably the world's fastest-growing car market. To the alarm of UN bodies such as the Asian Development Bank and even its own government, the Chinese are expected to buy seven million new cars a year by 2007.

About 40 per cent of that market is controlled by SAIC, thanks to deals with three of the world's largest car makers - VW-Audi, the American giant GM, and the Japanese market leader Toyota.

If the MG Rover deal goes ahead, it hopes to make the first 50,000 SAIC-badged cars by 2007 and plans to list its shares in Hong Kong, and possibly in London, before then.