The prospect of a new sports car factory being set up in the Midlands looks to be receding after Project Kimber revealed offers from Wales and Germany are now in pole position.

Kimber, the team behind the unsuccessful bid to buy MG Rover last year, had considered restarting production of its new Smart Roadster and Coupes at a former Dunlop factory in Radford, Coventry.

The new factory would have employed around 200 engineers making 9,000 cars a year with production beginning early next year.

Kimber had been looking to license the MG name from Nanjing Automobile (NAC) - the successful bidder in the MG Rover auction - for use on its cars.

But the revelation that Nanjing has sufficient financial backing from three American banks and investors in China appears to have scuppered any deal.

Now Kimber, which was named after the legendary MG engineer Cecil Kimber, is actively considering sites in South Wales and Thueringen in eastern Germany.

The support for both sites exceeded the possibilities of Coventry, said Barrie Wills, chief executive of Project Kimber.

He said: "I grew up in Coventry, in the Radford area, went to school there, and was an apprentice at Jaguar cars in Browns Lane.

"But I have to avoid my emotions getting mixed up with sound, sensible business decisions.

"But the position of Coventry is not looking as advanced as those of Theuringen or South Wales."

Key among the decisive factors was the level of support from the regional development agencies.

While the Welsh Development Agency had promised the maximum possible financial assistance, thought to be nearly #4 million, the German authorities have also indicated help with a site and financial support.

Mr Wills said: "We have got at least one brand; we offered some money to Nanjing in return for the right to use MG.

"It would appear that the Chinese have got their investment, so they don't need us any longer.

"We made a proposal to them and are still waiting. If they are confident of getting the money - great stuff, we are delighted for them.

"We wish them nothing but success in what we know is their very sincere objective of creating sustainable jobs in the West Midlands in car manufacture, component supply and in the local economy.'

"If that does not work out, for as long as we have not committed ourselves to Wales or Thueringen, we remain ready and willing to assist them in the West Midlands."

Both the German and Welsh plans involve completely new factories being set up on greenfield sites.

The German option is thought to be the front runner because it is located next to suppliers who produced parts for the Smart Coupe and Roadster which will be relaunched by Kimber after it clinched a deal with Smart parent company DaimlerChrysler.

Mr Wills added he was disappointed with the level of support from Advantage West Midlands, while his company had the necessary #40 million in place to realise its plans.

"All areas have lots of suppliers around them, but the only support we have had from AWM is a letter. We are disappointed."

A spokesman for AWM said: "We took an application from Project Kimber for #1.95 million to the West Midlands Industrial Development board last month following extensive work between the agency and the company.

"The board considered the project has many attractive features and was supportive in principal which we reported back to the company.

"However there are some significant questions to be answered, including clarification of Kimber's financial backing which we have yet to receive.

"The Welsh Development Agency reports to the Welsh Assembly and has different rules governing the provision of grants.

"We are still awaiting further discussions with Project Kimber."