The new Chinese owner of MG Rover's assets would be unable to begin car production without a deal over intellectual property, the losing bidder said on Monday, according to The Times.

The newspaper said the stand-off between Nanjing Automobile Corporation, the victor, and Shanghai Automotive Industry Corporation (SAIC), its rival, is set to blow up into the worst public row between state-owned Chinese businesses in history.

SAIC, which owns the intellectual property rights to the Rover 25 and 75 and a series of engines, reportedly alleged that Nanjing could not produce any cars without its permission, because all its plans are based on the use of one or other of those designs. However, Nanjing said that it has the right to the MG variants of Rover's saloons and could, therefore, make the cars that it wants to.

According to The Times, SAIC also claimed that the Powertrain engine plant will prove to be useless to Nanjing because it is capable only of producing engines for which SAIC has the intellectual property rights.

The Times said Nanjing, which is working with Arup, the engineering consultancy, is searching for managers to begin production at Longbridge but has ruled out hiring Nick Stephenson, one of the Phoenix Four former directors of MG Rover — even though he has been an unpaid adviser to the group.

SAIC reportedly said on Monday night that it would defend its intellectual property rights, although it is believed to have ruled out legal action against PricewaterhouseCoopers, the administrators.

The Times noted that SAIC had complained that its bid was not considered fully. The company had been discussing possible lease terms with St Modwen, the property company that owns the Longbridge site, on Friday afternoon — hours before PwC announced that it had signed a sale with Nanjing.

The administrators reportedly said that SAIC had been in talks with MG Rover for 15 months during its first attempts at a joint venture and had since had three months to table a bid after the carmaker went into administration.