The German car-maker BMW has dismissed as absurd a report to appear in tomorrow's edition of Stern magazine that its chairman, Prof Joachim Milberg, is about to be sacked for mismanaging the sale of Rover Cars. The company also denied that the Quandt family, which owns more than 46 per cent of BMW, wants to sell its shareholding in the firm. "All of the claims in this report are false," a spokesman said.

Stern claims that the Quandt family, rather than Prof Milberg, initiated the sale of Land Rover to Ford and that younger members of the family were impatient to wash their hands of BMW. But a spokesman for the Quandt family insisted yesterday that they had full confidence in the BMW chairman and had no intention of selling their stake in the firm.

"The Quandt family has neither a reason nor an interest in parting from BMW. Why would you sell such a pearl?" the family's spokesman, Mr Thomas Gauly, said yesterday.

Mr Gauly defended Prof Milberg's decision to sell Rover after it became clear that the British subsidiary could not be turned around and denied that the decision had come to late.

"Strong leadership and good decision-making are among the reasons why the family stands fully behind Mr Milberg," he said.

BMW yesterday rejected claims by Britain's Trade and Industry Secretary, Mr Stephen Byers, that the German company had misled London about its intentions towards Rover. Dismissing British threats to boycott BMW cars as "like something out of the Middle Ages", the firm's spokesman, Mr Axel Obermuller, insisted that the British government was fully informed about the crisis at Rover.

"We were in constant contact with Byers's ministry and we told them repeatedly that this situation could not be borne much longer," he said.

Mr Byers will meet Prof Milberg in Munich tomorrow to discuss the Rover sale but BMW declined to say yesterday whether it would contribute to a fund to compensate the West Midlands for the economic damage caused by the sale. The German ambassador in London warned yesterday that, unless Britain toned down its rhetoric over Rover, other German investors could be deterred from investing in Britain.

The chairman of Audi, Mr Franz-Josef Pafgen, warned that the fall-out from the Rover sale could damage the German car industry as a whole and called for a speedy resolution to the dispute between Munich and London.

"I don't believe we can gain any advantage from the troubles at BMW," he said.