MG Rover has renewed contact with Malaysian national carmaker Proton and its UK sports car and engineering subsidiary, Group Lotus, on possible long-term engineering and technical collaboration on new models, reports the FT today.

The paper says the discussions are among several being held by MG Rover with suppliers and other potential technical and engineering partners as it prepares to replace its Rover 45/MG ZS mid-range cars and smaller Rover 25/MG ZR models between 2004 and 2006.

Kevin Howe, chief executive, is expected to announce before the end of next month that the mid-range cars will be based on a shortened version of the existing large Rover 75. A new platform will also be needed for the smaller Rover 25/MG ZR and there are potentially big cost savings for MG Rover and Proton in developing jointly a small car platform, with the engineering expertise of Group Lotus, for both to use from about 2005. The talks, however, are understood to be focusing more on three-way powertrain and other engineering collaboration for the mid-range replacement.