MG Rover and China Brilliance Holdings Co. Ltd (CBH), part of the Brilliance Group, are in discussions relating to the formation of a wide-ranging strategic alliance and co-operation agreement, the two companies said in a statement today.

The scope of the proposed agreement does not involve a cross-equity shareholding by the parties but the proposed technical and commercial collaboration, however, includes:

·       The formation of a co-operative arrangement for the joint development of new models

·       The manufacture of a range of vehicles in the UK and China

·       The establishment of a joint engine strategy, which will see both companies use each other's engines

·       The establishment of a common component supplier base to maximise economies of scale

·       The establishment of a joint research and development centre

"The proposed alliance represents an exclusive arrangement of this nature for both parties in the UK and China," the statement said. "Several meetings have taken place but as yet no formal decisions have been taken. Further announcements will be made in due course."