MG Rover has warned the Polish government that if the company's plans to invest in the country conflict with its ambitions in China it will choose the latter.

The British carmaker has been in talks with the authorities in Warsaw over a disused Daewoo car plant close to the Polish capital for some time, and insisted yesterday that the negotiations were continuing.

A Polish newspaper had reported that Rover had written to Treasury minister Zbigniew Kaniewski and deputy economics minister Jacek Piechota saying that the talks had been suspended.

A spokeswoman said that a letter had been sent to the Polish government, setting out MG Rover's position in relation to negotiations it was having in both Poland and China.

"The letter reminded the Polish authorities that it was also negotiating with China and that if a deal with China conflicted ... and the company had to make a choice it would opt for China."

Rover, Britain's last independent volume car manufacturer, signed a letter of intent with the Malaysian car maker, Proton this year to look at the possibilities of collaboration.

The company has spent three years looking for a partner to develop its crucial medium-sized car which is due to be launched next year. One reason for its reticence over the progress of talks may stem from the collapse of its alliance with China Brilliance in 2002.

There was good news for Britain's motor manufacturers yesterday with the Society of Motor Manufacturers and Traders suggesting that the industry could be on course for its best year since 1999.

Figures from the SMMT showed that car output rose by 7.4% in March to 163,123 units, the seventh successive monthly increase. Van, truck and bus production was also ahead in March.

"The figures reflect the strength of carmaking in Britain following years of investment in key car plants across the country," SMMT chief executive Christopher Macgowan said.