The Rover 75 and 25 could be made in the Far East by the end of the year, it emerged last night.

China's state-owned car maker has approached suppliers in the Midlands as it presses ahead with plans to build models in Shanghai which will carry the Rover badge.

The Birmingham Post has learned that Shanghai Automotive Industry Corporation (SAIC), which last week finally rejected any rescue deal for the Longbridge firm, has already contacted several largecomponents makers which used to supply MG Rover.

A source close to SAIC said: " Exploratory letters have gone out to components companies to test what the pricing structures would be for their parts.

"But it is too early for a decision on making the cars in China."

Local politicians said the latest development would be devastating for the 5,000 Longbridge workers who received their redundancy notices on Monday.

But business leaders said it would provide some consolation for components makers hit by MG Rover's collapse.

Jerry Blackett, policy director at Birmingham Chamber of Commerce and Industry, said: "We wish it was different circumstances, but the fact that first-tier suppliers may be able to sell to SAIC offers some glimmer of hope to those companies hit hard by the MG Rover demise.

"It is not completely clear, but there is talk of production starting as soon as the end of this year."

Mr Blackett added: "It seems the Chinese never really wanted Longbridge. They bought the designs for the Rover 75 and 25, but they didn't want 5,000 Brummies.

"Now they will be able to buy the parts on the cheap because the suppliers have got nowhere else to go. It looks like the Chinese have played a very shrewd game."

The development came as it emerged MG Rover lost £250 million last year compared with a loss of £92.6 million in 2003, the last published accounts. The details were included in information packs sent to would-be buyers of the company's assets.

Originally, about 70 potential bidders had contacted the administrators PricewaterhouseCoopers, but that has now been whittled down to 40. It is understood SAIC, and other companies, have approached PwC about the possibility of buying equipment from the Longbridge production lines.

The scale of MG Rover's losses threw into doubt claims by John Towers, the company's chairman, that production could still be maintained at Longbridge.

He insisted yesterday that a deal with the Chinese "could still come good", adding: "It is not dead."

But Julie Kirkbride, the Conservative parliamentary candidate for the Bromsgrove constituency, which includes part of the Longbridge factory, said: "That the Rover brand will now be badged and made in China is a very bitter pill for the workers to swallow, especially when they took such pride in the cars being manufactured in the Midlands."

Ms Kirkbride blamed the directors of MG Rover, who sold the intellectual property rights for the Rover 75, 25 and K Series engine to SAIC for £67 million last year.

The Rover name, which is owned by BMW and was licensed to the company, was sub licensed to SAIC under the same agreement.

She said: "Once the Chinese had been sold the intellectual property rights to the cars, the directors of MG Rover gave away their principal bargaining chip."