SHANGHAI Automotive Industry Corp and Yuejin Motor Group yesterday created the biggest merger in the history of China's automobile industry.

The signing ceremony was held in Beijing for the merger between SAIC and Yuejin's Nanjing Automobile (Group) Corp.

Analysts were quick to say that more mergers are likely in the auto industry.

"Compared with the cooperation agreement, the integration of human resources, products and planning should be more important to the merger of Chinese auto giants," said Jia Xinguang, former analyst at the China Association of Automobile Manufacturers.

Guotai Junan Securities' Zhang Xin also agreed. "This is just a start, not the end of mergers in the industry," Zhang said.

With government encouragement, it didn't take long for the former competitors to reach common ground and sign a deal.

The merger will lead to a series of changes in business strategy for the auto maker.

For starters, it cleared the way for SAIC and Nanjing Auto to co-develop self-branded models.

SAIC's Roewe and Nanjing Auto's MG models were both produced on MG Rover models before the iconic British car maker went bankrupt. The models competed against one another and created concerns over intellectual property rights.

Chen Hong, vice president of SAIC said the MG will be kept after the merger and the two brands will be marketed differently. The MG will also be sold overseas, he said.

"In the future, MG vehicles will be more sporty and Roewe will emphasize elegance," Chen said, adding that the brands share similarities in technology and parts.

SAIC also plans to build a stronger presence overseas by integrating its engineering institution with Nanjing Auto's manufacturing plant in Britain.

Nanjing Auto's plant in Britain will soon start production and new MG models will be added to improve its brand image on its home market.