The Chinese owner of the former assets of MG Rover has agreed to sell the Austin-Healey brand to a team of ex-managers of the failed carmaker as part of a provisional agreement to restart vehicle production in Birmingham, England.

Nanjing Automobile and GB Sports Car signed a memorandum of understanding on Wednesday, according to people close to both companies. The move is likely to quell growing concern about the future of the sprawling Longbridge car factory in Birmingham, which has been shut since Rover’s collapse in April.

Further negotiations are required before a binding contract can be signed committing the two sides to British car production, people close to the talks said. A final agreement is understood to be likely within six weeks, assuming legal and financial details can be settled. “It has taken more time than we wished but we have got to a position where we have got something fairly tangible,” said one person close to the talks. “It is a clear statement of intent.”

The agreement to sell the venerable Austin-Healey name suggests GB Sports could start its own sports car manufacturing even if the deal with Nanjing fails to materialise. It also demonstrates GB Sports’ willingness to commit cash to Nanjing, although it is unclear how much the company has agreed to pay. The danger that negotiations between the two would fall apart came into focus last month when Wang Qiu Jing, vice president of Nanjing, told the Financial Times that he was talking to other possible partners.

GB Sports, which is backed by unidentified US funds, refused to confirm the agreement. It said: “The talks are progressing well. We will obviously go public when we have got a firm plan for a new business venture. There is still some way to go.” Nanjing could not be contacted.

The revival of the Austin-Healey name was part of GB Sports’ unsuccessful bid for MG Rover. GB Sports believes the Austin-Healey badge, last used in 1968, still has resonance with drivers.

Nanjing and GB Sports hope to finalise a joint venture that would build the MG TF sports car and ZT saloon in Birmingham and import the rest of the range from Nanjing factories in China. GB Sports would also have its own business building sports cars under other brands, and is thought to be bidding to buy the former Rover racing division, which owns the SV supercar, from PwC, its administrator.

Nanjing bought the assets of Rover from administration in July for £53m ($91m) after a fierce bidding war, and has since been dismantling production lines for engines and small and medium cars, and shipping them to China.

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