Shanghai Automotive Industry Corp (SAIC) has agreed to purchase the rights to the Rover brand name from BMW, sources said yesterday.
SAIC already owns the design rights to two models the Rover 75 and 25 which it bought from the MG Rover group last year.
The latest deal is reportedly worth 11 million pounds (US$20.8 million).
However, Ford, which bought Land Rover from BMW in 2000, has first refusal on the Rover brand.
It has 90 days to decide whether to take up its option, and said it was now considering its position.
A BMW spokesman told China Daily: "We have been in discussions with several parties on the sale of the Rover trademark, and a deal has been closed with one of those parties.
"Ford has the right of first refusal, which they can exercise during a 90-day period."
BMW insiders confirmed that SAIC had agreed to purchase the rights, but SAIC spokeswoman Zhu Xiangjun refused to confirm this.
Nanjing Automobile Group Corp acquired MG Rover's factories in Longbridge, central England, and other assembly lines last year.
It was also believed to have been in discussions over the rights to the Rover trademark.
A spokesman for Ford said: "Ford does have the right of refusal to purchase the trademark, but obviously in the current situation is considering its position."
He added that any owner of the Rover brand name must respect the restrictions on its use, relating to vehicles with the same attributes as Land Rover models.
"There are a number of restrictions that were put on the use of the name when Ford bought Land Rover, and those are transferable to any owner of the brand," he said.
Wang Xia, an analyst with Shanghai-based consultancy Autobeat, said securing the right to the Rover brand name would give SAIC a huge boost.
"Names really matter in the auto market," he said.
"Chinese customers focus more on the name of the cars than other issues.
"If SAIC gets the Rover trademark from BMW, it will significantly help the company sell its cars both in the domestic and global markets."
SAIC's first own-brand model, which is scheduled to hit the market this November, is expected to get a Chinese name sounding like Rover.
SAIC has registered seven brand names including Longfu, Luhua, and Longkun, all of which are similar to Rover in their pronunciation.
The Shanghai-based automaker established SAIC Motor Manufacturing Co earlier this year to develop own-brand sedans.
"The first model is scheduled to roll out by this November and we are planning to produce 35,000 units next year," said SAIC spokesman Huang Huaqiong.
"The new model will be a mid-class sedan. The sedan will adopt many elements from MG Rover's former models."
The new model will adopt the chassis and other components from the old Rover 75, according to sources close to the company.
SAIC has long aimed to become an industry giant like General Motors or Toyota.
(China Daily August 25, 2006)