Beleaguered British car maker MG Rover yesterday reportedly said that worldwide sales this year would be the lowest for a decade and revealed that the company would introduce more "wood and leather" as standard in its Rover models to attract older customers.

However, the Daily Telegraph reported, the car manufacturer admitted that in order to clear the way for the new-look Rovers, dealers would have to slash the cost of existing vehicles on the forecourt.

Rod Ramsay, newly appointed managing director of sales and marketing for MG Rover, told the newspaper that Rover would not have another year as bad as this - MG Rover would sell less than 120,000 cars, 17% down on the 144,000 sold in 2003. He said: "It is not a result I want to see repeated in 2005. We are determined to increase our sales in 2005."

MG Rover reportedly attributed the low figures to a "lack of confidence" about MG Rover's future which has dogged the company for the past 12 to 18 months, as well as confusion about the different brands among consumers.

Ramsay told the Telegraph that confidence had only recently come back with news of a possible joint venture tie-up with Shanghai Automotive, a leading Chinese car maker.

That deal is still on track to be signed off next month. Ramsay told the paper: "We are still on track to gaining final agreement early in the new year. When the deal is formally confirmed in a way that we can make public we will see a step change in dealer confidence."

He reportedly added that Rover's new medium car, due for launch in 2006, was proceeding well, with help from the Chinese. He said: "Work is proceeding on the medium car. Things are happening concurrently and action is already taking place on practical issues prior to January's completion."

Ramsay, who has strengthened his sales and marketing team with three senior appointments, told the Daily Telegraph he had commissioned research to find out what Rover customers want.

As a result, from the middle of next year, Rover cars will be more targeted at older drivers, backed by an advertising and marketing campaign, costing more than £10 million, suggesting that "Rover is a better place to be".

The Daily Telegraph said Rovers which sell for just £9,000 will be fitted with premium fittings such as leather and wood finishes and the company said it would pay for these improvements by not offering customers large discounts on the forecourts, typically £1,000 a car.

Ramsay admitted to the newspaper that the company's new City Rover sold only 6,000 this year, well below the 20,000 forecast UK sales. However, he hoped that sales of these cars would climb when it is launched in Europe in the first half of 2005.

Automotive News Europe reported this week that MG Rover stopped importing CityRover from India into the UK as far back as July, asking for improved quality and lower costs. Stocks on hand have supplied the UK since.

The trade newspaper said Rover displayed a left-hand drive model with improved interior at the recent Bologna motor show and that Italy would be the first European car to get the car from February or March. France and Germany follow, with Spain and Greece getting the car in the summer. Initial versions will have a 1.4-litre petrol engine but MG Rover hopes to add a turbodiesel later.

Automotive News Europe added that Tata already sells the Indica, on which the CityRover is based, in some European markets with a 1.4-litre turbodiesel.