NANJING: Nanjing Automobile Corp, the Chinese partner of Italian carmaker Fiat Auto, yesterday began making vehicles under acquired British brand MG in the capital city of East China's Jiangsu Province.

The first three models to roll off the assembly line yesterday were a 1.8-liter MG7 sedan, a 2.5-liter larger MG7 sedan and a 1.8-liter MG TF roadster.

It was the first time an acquired foreign car brand has been produced by a Chinese carmaker in the world's second-biggest vehicle market.

Nanjing Automobile in July 2005 spent 53 million pounds buying the MG brand, a closed plant in Longbridge, England, and Powertrain, the engine unit of collapsed British carmaker MG Rover.

Wang Haoliang, the company's chairman, yesterday described the move as "a third path" in an effort to enhance the international competitiveness of China's car industry.

All of the other Chinese carmakers are building their own home-grown brands or vehicles under foreign badges through joint ventures with overseas counterparts.

Nanjing Automobile's President Yu Jianwei said the plant in England would resume building MG cars this year and the group is also in discussion with several US investors to assemble MG vehicles in Oklahoma.

"But Nanjing will be MG's main base," Yu said.

The company is building an annual production capacity of 200,000 cars, 250,000 engines and 100,000 gearboxes in the city with a total investment of 3.5 billion yuan.

Zhang Xin, Nanjing Automobile's vice-president and chief of the MG project, said it would extend MG's line-up to cars with engine capacity between 1.1 and 1.6 liters in the near future.

The company has not revealed a retail price for the first three locally made MG vehicles in China or a 2007 sales goal for them.

Analysts said Nanjing Automobile also faced a pressing task to establish MG's brand image in China, as most local buyers are not familiar with the British marque.

SAIC Motor Co Ltd, another Chinese carmaker partnered with General Motors and Volkswagen, launched its 2.5-liter Roewe sedan, based on Rover 75 technology, on the domestic market earlier this year. The Roewe, widely seen as a rival to Nanjing Automobile's MG7 series sedans, sells for between 231,800 and 276,800 yuan.

SAIC in 2004 bought the Rover 75 and 25 sedan technology, as well as K-series engines from MG Rover for 67 million pounds.

Sales of China-made vehicles grew by a quarter to 7.22 million units last year from 2005, according to industry data.