SHANGAHI -- Ambitious Chinese carmaker SAIC and Britain's MG Rover are still finalizing their joint venture and reports of 1 billion pounds ($1.86 billion) in investment were premature, the companies said on Wednesday.
Beijing still had to approve terms of any deal that would help rejuvenate Rover's model range and give state-run SAIC a beachhead in Europe as well as access to technology and expertise, the companies said.
"In fact, we're still in negotiations. There's been no final conclusion. As to the investment or scope of cooperation, we're still unsure," Xue Hao, a spokesman for Shanghai Automotive Industry Corp., said in Shanghai. "We don't know when anything will be formalized."
Citing an unnamed senior management source, the Times newspaper said SAIC, one of China's top three automakers, found British media reports over the weekend of an imminent billion-pound venture "embarrassing".
"The program of the deal is still under discussion and we still have to talk about many details," the Times quoted the unnamed source as saying. "We read in the British press that we are going to invest 1 billion pounds in Rover, but it's not like that. That's not how it works."
MG Rover spokesman Stewart McKee said the media, and not Britain's last independent volume carmaker, had introduced the billion pound figure. He expressed confidence that the partners would strike a deal by early next year on forming a joint venture.
"The purpose of the joint venture company is the development of new products which will take investment from Shanghai Automotive and will take skills, design and engineering expertise from MG Rover," he said.
Rover has 1,250 dealers worldwide, the bulk of which are in continental Europe, a spokesman said. It plans to add 100 more in 2005.
The precise level of ownership of the venture is not cast in stone, he said, but added: "The principle is that SAIC will have a majority interest in the joint venture company but I think you will find that in a practical way the partnership is even because we both need each other evenly."
The Independent newspaper had reported on Saturday that SAIC will own 70 percent and MG Rover 30 percent of the venture, which will develop and produce cars in China and England. It aimed to make 1 million cars a year. SAIC produced 597,000 passenger cars in 2003, and the company also makes buses, trucks, motorcycles and tractors.
The billion pound figure reflected estimates of what it would cost to develop a new range of models, a spokesman said, the first of which would be a replacement for the Rover 45 due in 2006. A new small car, a large executive model and a new sports car were set to follow.
The plan calls for building all the core models in both locations, MG Rover has said, with the partners focusing output on models tailored to meet local demand.
SAIC and Rover said in June they had signed a cooperation agreement, but details of the accord have been sketchy.
MG Rover has been struggling to break even after being sold to Phoenix Ventures Holding four years ago by Germany's BMW AG for just 10 pounds.
SAIC is already the main Chinese partner of both General Motors and Volkswagen AG. It aims to become one of the world's top six automakers by 2010 and has said it wants to list its stock overseas to raise a reported $2 billion.
It agreed last month to buy control of South Korea's Ssangyong Motor Co. for about $500 million, and executives have said SAIC would keep seeking overseas acquisitions and develop its own brand.