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The company's keenly- anticipated 155mph ZT 260 saloons and estates are now hitting dealer showrooms for £27,995 and £28,995 on-the-road respectively. Beneath the purposefully-elegant styling beats the 4.6-litre V8 heart of a Ford Mustang.

Not only that, but from the back of the car the sharp-eyed will notice an all-new rear suspension and back axle lurking behind four exhaust pipes, cowled in racing-style body heat shields, because this car pushes its 256bhp through the rear wheels.

MG's engineers describe converting the Dr Jekyll front wheel-drive Rover 75 into the Mr Hyde MG as 'relatively straightforward'. They were helped by the 75's body being designed – in the cause of body strength – with a central tunnel running through it. This now houses the propshaft that transmits power from the engine to the rear wheels.

Working with Roush, an American motorsport and engineering outfit with a long experience of Ford power units, MG recalibrated the compact V8 for sharper accelerator response and, because of Europe's stricter drive-by noise regulations, new exhaust and intake systems were developed to quieten the V8's voice.

Anyone who has ever driven a high-powered front-wheel drive car will know why the ZT 260 had to be rear-wheel drive. After all, it has 83bhp more than the most powerful Rover 75 and is capable of accelerating from rest to 60mph in 6.2 seconds.

To keep the value-for-money price, the ZT 260 is built at Longbridge using a clever mix of regular production line processes with dedicated additional facilities for the car's assembly operations.

MG believes the ZT 260 range will appeal to user-choosers in the fleet market because of its unique character and performance combined in a restrained-looking package.

Almost anything costing from £28,000 to £33,750 (for the top-specification SE Tourer) with a sporting attitude could be a rival so that could include the BMW 330i, Jaguar S-Type and X-Type, or even top-of-the-range Ford Mondeos.

Its headline competitor will be Vauxhall's Monaro Coupe with its even more powerful 328bhp 5.7-litre V8, which is expected to cost from about £28,500. But it is due next April and is likely to be limited to 300 units in 2004.

The 314g/km carbon dioxide emission of the ZT 260 will put off BIK-taxed payers but an MG spokesman said: 'Some people choose with their hearts and not their minds. We all have to pay tax so why not get maximum value out of it. The Jaguar S-Type only offers a V6 – we can give you a V8.'

MG's sporting history goes back to 1924 and the 1.5 millionth car was made last April. MG now has the widest model range in its history and with cars as appealing as the ZT 260 and a 385bhp supercharged model on the way, there is a hopeful future for the much-maligned firm.

Behind the wheel

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The V8 engine has been pushed so far back in the chassis for handling balance (the battery has been moved to the boot for the same reason) that there's now no space to the left of the clutch pedal for your foot and you have to slot it under the pedal.

You soon get used to it, though, and otherwise the driving position is as before, with only a V8 badge on the dashboard to distinguish the car from less powerful models in the range.

Across country or around town, the car is amusingly easy to drive and you can always hear just enough of that lazy V8, which red-lines at 6,000rpm, burbling away.

With a huge 302lb-ft of torque at 4,000rpm and strong pulling power from just 1,000rpm, you aren't forever having to work up and down the somewhat slow five-speed gearchange. In top, however, cruising is effortless, with nearly 30mph per 1,000rpm, but the price of that big V8 is fuel economy of 16-22mpg.

Acceleration is fast yet effortless and brings an immediate grin to your face. Slipping past slower traffic often needs only a flex of your foot and when you need to take off speed the big brakes, developed with specialists AP Racing, are impressive.

Even on typically bumpy B-roads, the ZT 260 is an inspiring companion with impressive ride comfort for a sports saloon.

MG doesn't believe in the safety net – or interference if you prefer it – of electronic stability control systems. Most of the time there's safe, predictable understeer. It takes provocation, even on a wet road, before the tail of the ZT 260 steps out and unlike many wide-tyred cars the breakaway is benign.

To show what the car can really do, touring car racer Anthony Reid flung me round Mallory Park race circuit in Leicestershire, where Gerards Bend is a corner that he could take sideways at any angle. Thankfully, he told me about his accident there years ago in a single-seater after we had finished.

Driving verdict

Overall, the ZT 260 saloon feels really solid and engineered to last. It delivers strong performance and handling and a thumping V8 in a body with a reserved Bentley-esque appearance. With expected production of 30 to 40 per week, it will be exclusive so residual values could be reasonable, although with high CO2 and low mpg it will take a committed petrolhead to appreciate it.

Model: ZT 260
Engine (cc): 4,601
Max power (bhp/rpm): 256/5,000
Max torque (lb-ft/rpm): 302/4,000
Max speed (mph): 155 (limited)
0-62mph (sec): 6.2
Fuel consumption (mpg): 21.5
CO2 emissions (g/km): 314
Transmission: 5sp
Fuel tank capacity (l): 66
On sale: now
Prices (OTR): £27,995
Figures quoted for saloon