A top Chinese automaker, SAIC Motor Corporation, has merged with rival Nanjing Automobile Group to create a company that looks to rival some of the large multinational competition in China.

In a separate but related move, Fiat has agreed to sell its stake in a passenger car venture with Nanjing Auto, after being unhappy with the Chinese company’s level of commitment to the partnership.

(Click through the jump to read more about the merger and Fiat's jumping ship.)

SAIC Motor will pay $286.7 million for its rival, including the rights to the MG Brand, and Nanjing’s parent company will be given shares equal to 4.9 percent of the new company. SAIC Motors currently owns roughly 14 percent of the Chinese car market, partnering with General Motors and Volkswagen to sell 441,584 cars in the first half of 2007. This new merger would seem to create a Chinese automaker with the size and resources to compete with the global giants for control of its home market.

Fiat saw the Chinese merger as a good time to end its money-losing relationship with Nanjing Auto, a venture known as NAC. Fiat had grown more concerned with Nanjing’s focus, as that company worked to relaunch the MG brand. The Italian automaker now seems poised to join with China’s Chery Automobiles, in a second effort to compete in the fast-growing Chinese market.

+ Automotive News: China's SAIC Motor, Nanjing Auto to merge (subscription may be required)