MG Rover was formed from the parts of the former Rover Group volume car production business which BMW sold off in 2000 due to constant losses and a declining market share. BMW had acquired the Rover Group from British Aerospace in 1994 and had since sold the Land Rover business to Ford, and split-off the MINI business as a new BMW subsidiary based in Cowley. MG Rover took control of the remainder of the former Rover Group volume car business, which was consolidated at the Longbridge plant.
Phoenix Consortium ownership
When BMW sold off its interests, MG Rover was bought for a nominal £10 in May 2000 by a specially-assembled group of businessmen known as the Phoenix Consortium. The consortium was headed by ex-Rover Chief Executive John Towers.
When Phoenix Consortium took over, their first loss for the last eight months of 2000 were reported to be around £400M. By 2004, the company had stemmed the losses to around £80M but never got to the chance to achieve a profit.
MG Rover's best year for car sales was their first full year of business, in 2001 — when they sold over 170,000 cars. In the year of 2004, their sales had declined to around 120,000, a steep decrease of 50,000.
The company eventually ceased trading on 8 April 2005 after having debts of over £1.4 billion and their proposed deal with SAIC collapsing.
Aborted deal with SAIC of China
In June, 2004, it was learned that Shanghai Automotive Industry Corporation had signed a joint venture partnership to develop new models and technologies with MG Rover. This led to much speculation among the British media suggesting the Chinese company was poised to launch a takeover. Later that year, in November, news broke of an agreement between the two companies to create a joint venture company to produce up to a million cars a year, with the production shared between MG Rover's Longbridge site and locations in China. SAIC were to have a 70% stake in this company in return for a £1 billion investment, with MG Rover owning the remaining 30%. However, this agreement had to be ratified by the Chinese government, specifically its National Development and Reform Commission (NDRC).