MG Rover has dimissed a report in the Sunday Times claiming it was going to increase new car prices as a deliberate attempt to damage the company.

The newspaper claimed it had obtained a letter sent to dealers by MG Rover informing them it may have to raise prices in the New Year to compensate for spiralling component costs from British plants still owned by BMW, MG Rover's former parent company. The paper also says that MG Rover's board believes the company will run out of cash by March 2002 unless it can find a partner to invest up to £400 million into the comany.

However, a MG Rover spokesman said the report was inaccurate and misleading and "appeared to be a deliberate attempt to damage the company".

In fact, he said, the letter to dealers referred to increases in parts' prices.

"The newspaper had got hold of our annual trade letter outlining our parts' strategy, which includes powertrain components we buy from BMW. As with any review this is bound to include increases in prices," the spokesman said.

The spokesman also added that a business plan, prepared by the company board in association with Deloitte & Touche "clearly shows that far from running out of cash by 2002, MG Rover is cash positive throughout the period of its five year plan".