A consortium led by former Rover chief John Towers was now “very much back in the driving seat” to take over the company, a motor industry expert said today.

Rover’s German owners BMW would have to reconsider carefully the Towers bid “if only to save face”, said Mark Norman of the CAP Motor Research company.

The Phoenix Group’s bid collapsed after BMW said the it had not been given enough information about its financial backing.

BMW said this did not constitute a basis for entering negotiations with the Phoenix consortium.

Mr Hemming revealed that BMW had failed to extend the deadline for bids which left Phoenix without enough time to guarantee certain financial arrangements.

But he admitted that the Alchemy pull-out, in the short term, was “awful news” for Rover employees and dealers as it would lead to further uncertainty.

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Mr Norman said: “Towers is now right back in the running and in a far better position than he was before.

“BMW needs to get something out of all this and they will have to listen very carefully to what the Towers consortium says.”

He added: “The Alchemy deal may have foundered on the question of their purchase of components from BMW.

“The idea that BMW was completely pulling out of Rover was far from the truth. BMW is keen to hang to some of the juicy bits of Rover.

“It could be that Alchemy were unhappy at some of the terms involving production at Cowley in Oxford.

Mr Norman went on: “Unfortunately, this latest news is not going to do Rover any good at all. It’s awful for the workers who just don’t know where they are. The dealers, too, are in a state of uncertainty.

“Sales of Rover vehicles have actually been holding up rather well, as there are some terrific bargains on offer at present.”

Phoenix was still hopeful that its bid may be effective even after BMW turned it down.

Mr Hemmings said then he didn’t think that in itself meant BMW wouldn’t look at his bid.

He said BMW’s statement had been misinterpreted and that the company was still talking to both Phoenix and Alchemy. “There’s nothing new that’s come out of Munich today,” he said.

Woodley did not go into detail on his talks with BMW but hinted that further developments over Rover were likely very soon.

“Don’t be surprised if there are other twists in the tale between now and tomorrow morning,” he said.

Woodley urged BMW to give Phoenix access to Rover’s books so the consortium could line up the finance for its bid. “People are between a rock and a hard place,” he said of Phoenix.

The apparent decision not to go ahead with talks with Phoenix leaves Alchemy as the only realistic bidder for Rover but does not eliminate doubts surrounding the bid, Bayerische Landesbank analyst Peter Worel said.

“It’s difficult to imagine (Alchemy) have the financial strength to continue (Rover) in the same way in the future,” he said.

“It looks a bit like Rover may end up doing what they did before BMW came, namely producing the models of other car makers as they did with Honda,” Worel said, adding that significant job losses at Rover appear “inevitable” if the Alchemy bid succeeds.

Woodley had said BMW could save millions of pounds by selling Rover to Phoenix rather than Alchemy because the German car maker would save money by laying off fewer workers