MG Rover looks set to form a strategic alliance with China Brilliance Holdings Co. Ltd (CBH), part of the China-based Brilliance Group, to collaborate on the development of new models.

The scope of the agreement includes the manufacture of a range of vehicles in the UK and China, the world's fastest growing automotive market; the establishment of a joint engine strategy, which will see both companies use each others' engines; the establishment of a common component supplier base to maximise economies of scale and the creation of a joint research and development centre.

An MG Rover statement reads: “The proposed alliance represents an exclusive arrangement of this nature for both parties in the UK and China. Several meetings have taken place but as yet no formal decisions have been taken. Further announcements will be made in due course.”