Hundreds of drivers in Oxfordshire who have bought an MG Rover car in the past three years could find their warranties worthless following the collapse of the company.

MG Rover, which called in administrators yesterday (Friday), had been offering attractive three-year packages in a bid to attract more customers.

But following the collapse of the deal with China's Shanghai Automotive Industry Corporation, the company has ceased trading and the warranties could prove valueless.

Martin Kernahan, managing director of Oxfordshire MG Rover dealership Kernahan of Witney, said: "Customers that have an existing warranty might have some difficulty -- the situation remains unclear.

"There is certainly no separate company set up to handle the warranties. We still have obligations under the Sale of Goods Act, but that is much more limited."

An MG Rover spokesman said: "Until the future of the company is defined we cannot comment on warranties. We just don't know."

Parts will still be available, as they are handled by a separate company, Xpart, owned by bulldozer manufacturer Caterpillar, so servicing of existing vehicles will be carried out normally.

Mr Kernahan said his remaining stock would be sold and he predicted there would be some very cheap deals on new MG Rovers in the near future.

He added: "It is a sad day -- we have been dealers of MG Rover and its predecessors for more than 40 years. Some dealers will go bust, but we will continue to sell and service MG Rovers and look for a new manufacturer."

A spokesman for Phoenix MG Rover, in Summertown, Oxford, which is owned by the car manufacturer, said it was continuing to trade and had not been told otherwise. Meanwhile, former MG Rover workers in Oxfordshire have been speaking of their sadness at the news.

Former Cowley plant worker Bill Jupp, 73, said: "I feel the demise of Longbridge started way back under the amalgamation of the car industry before British Leyland.

"We produced cars that competed with each other and we should have stayed with Honda, as it would have given us the engineering expertise we lacked." Basil Wales, ex-manager of the BMC/British Leyland special tuning department in Abingdon, said: "I feel very sorry. France and Italy have manufacturers supported by the Government, but we're told we can't do that.

"There's so much expertise and capability at Longbridge -- I just hope it doesn't end up as a huge retail park."

Meanwhile, BMW bosses are remaining tight-lipped about a £500m loan made to MG Rover when John Towers' Phoenix Consortium bought it from the firm in 2000.

BMW spokesman Angela Stangroom said: "We don't know whether Rover is trading or whether it is in receivership, so we don't want to speculate on what might happen with the loan."

The loan, which runs until 2049, was due to be repaid once Rover became profitable, but that has not happened.

But fears the pensions of car workers in Oxford could be hit if Rover goes into administration, have been dispelled.

Ms Stangroom added: "We took responsibility for the old Rover Group pension scheme and the situation will have no impact at all."