Rival firms Shanghai Automotive Industry Corporation and Nanjing Automotive Company - the two firms that bought the remains of MG Rover - could be on course to merge, and bring back together the constituent parts of the old British car-maker that were seperated two years ago.
The firms have been in talks since before June. They claim that they are only considering a joint venture, but other sources maintain that a buyout of the smaller Nanjing Automotive by SAIC is more likely, thereby amalgamating the remains of MG Rover into one company.
Nanjing bought rights to the MG models in 2006 following MG Rover's collapse, and sold the first MG (a re-badged ZT) last week.
SAIC bought the Rover models, but failed to buy rights to the Rover name. The result is the Roewe 75 – a name devised by SAIC for the re-worked Rover 75s.
Nanjing Automotive has much better production facilities than the bigger Shanghai company. It owns a factory capable of producing 200,000 vehicles a year - significantly more than SAIC's ageing Yizheng factory.
This would be a huge incentive for Shanghai Automotive to buy its smaller rival, as it would allow for increased production of the Roewe 75. Owning its most significant competitor would also give it a stranglehold on the market.
Roewe is due to arrive in the UK in 2009 with the stretched 75, the Roewe 750. Nanjing Automotive maintains that it will launch the new TF roadster in the UK before the end of 2007.