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The Shanghai Automotive Industry Corp. (SAIC) has remained silent as MG Rover, Britain's last independent carmaker, filed for bankruptcy.
A company spokesman said on Sunday that SAIC may soon announce its decision on whether talks with MG Rover will continue on the proposed car making joint venture, but no definite information is available now.
Industry analysts in Shanghai say SAIC has learned that MG Rover's financial situation is worse than it expected and fears that Phoenix Venture Holdings, the company that controls the British car manufacturer, may become bankrupt too within two years.
That would put SAIC under a heavy financial burden, they say, as it would have to repay MG Rover's 427 million pounds of interest-free loan to BMW, its former owner.
The analysts therefore assume that SAIC will proceed with the talks only if it is certain that Phoenix will not become bankrupt before Rover's new car is rolled out in 2007.
Many believe the talks will end with MG Rover's bankruptcy.
MG Rover has been struggling to break even since it was sold four years ago by Germany's BMW to four businessmen in central England.
The British government has been making efforts to help the 100-year-old company reach an agreement with SAIC before the general election in May to prevent it from collapsing with the loss of several thousand jobs.
MG Rover and SAIC have been in talks for six months to create a joint venture that would give SAIC a foothold in Europe and rejuvenate Rover's model range, but the deal appears to have stalled.
Earlier Thursday, MG Rover said it had halted production at its Longbridge plant in Birmingham in central England, and called on the government to firm up its offer of a 100 million pound bridge loan to keep the company solvent and assist the proposed deal.
(Xinhua News Agency April 11, 2005)
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