Shanghai Automotive Industry Corporation, China's second largest auto group, confirmed Thursday it has signed a strategic alliance agreement with British carmaker MG Rover.
"We have signed a strategic alliance agreement with Rover on June 16, which is now subject to regulatory approval," SAIC spokesperson Xue Hao said.
He declined to provide specific details despite growing market talk that SAIC will take a stake in Rover as part of the agreement.
Earlier in June, the Financial Times reported that the two companies would produce new models based around the replacement for the British carmaker's medium-sized for launch late next year.
Versions of the models for Chinese markets would be built locally by SAIC and MG Rover would also be given other help to establish its brands in China, the world's fastest-growing new car market, the paper said.
The deal, which is subject to Chinese government approval, comes after MG Rover's planned strategic collaboration with another domestic automaker, Brilliance China, collapsed when the Chinese company ran into problems with the local government over its ownership.
SAIC, which produced 600,000 cars last year, has two of China's biggest joint ventures with Volkswagen AG and General Motors Corp.