UK car group MG Rover is set to return to profit next year and is planning to design and build a new medium-sized car on its own to demonstrate its independence, the Guardian newspaper reported.

Quoting chief executive Kevin Howe speaking at the opening of a new body shop at the Longbridge, Birmingham plant on Monday, the Guardian said that MG Rover should make a small profit in 2002, having slashed losses inherited from BMW.

In 1999 – the last full year of BMW’s ownership – MG Rover and Land Rover, which now belongs to Ford, lost around £840 million. The car company – which employs just under 5,500 and may possibly hire more staff later this year – now expects a reduction in its own losses to below £100 million this year, said the Guardian.

Howe reportedly said that sales for this year should be approximately 190,000 – compared with 205,000 in 2000 – and should rise to more than 210,000 in 2002. The company should be in profit in 2002 after launching three new MG saloons, new variants of the MGF sports car and the 75 estate in the coming months.

In the first half of 2001, Rover will decide how to design and fund a new medium-sized car to replace both the 25 and 45 ranges, with investment totalling £250-300 million. Production will start in 2004, said the Guardian.

MG Rover has previously been reported to be seeking a collaborative agreement with Malaysian car maker Proton to share the cost of producing a new platform for the 25/45 replacement.

Though the company has previously denied the talks, the Guardian noted that Howe said that an alliance was one of four options currently being considered, and indicated a strong preference for ‘going it alone’.

“It is the best front-wheeled platform in the world and designed to spawn other products. We could probably shorten it and develop an excellent medium car off it,” he told the Guardian, adding that early designs “show it looks great and is technologically great”.

Alternatively, the new platform could be developed with a supplier, the Guardian said.

This was the case with the MGF, whose body was largely developed by supplier Mayflower.

But Howe told the newspaper: “We could develop [the platform] ourselves and our business cost planning assumes we pay for everything ourselves.”