MG Rover, the UK car firm rescued by a consortium last year, has announced losses of £254m for its first eight months.

The pre-tax losses, which cover the period to December 31, last year, were about £50m less than once feared.

They are also a significant improvement on the £780m loss incurred in 1999 under previous owners BMW.

MG Rover said that it planned to reduce its loss for this year to significantly below last year's figure, while the group was on track to break even next year.

Chief executive Kevin Howe said: "Our 2000 performance was better than our business plan in all respects, and represents a major step towards our target of overall business profitability.

"During the year, we have made progress in many areas.

"We reduced by more than half the operating loss of the business, consolidated our production on the Longbridge site, entered new overseas markets and introduced five new models to our existing MG and Rover product portfolio."

The figures mark a brighter future for the group, bought by the Phoenix Consortium for a nominal £10 from German car firm BMW.