General Motors , the biggest overseas automaker in China, rolled out its first car under its newly created Baojun brand in the country on Tuesday.

The initiative, building on the success of GM's Chevrolet new Sail, represents a direct challenge to indigenous players, such as Geely Automobile Holdings <0175.HK>, which now dominates smaller cities and townships with affordable models.

Baojun 630, priced at between 62,800 and 73,800 yuan ($9,758-11,467), will target consumers in China's second- and third-tier cities initially, GM said in a statement.

It will also be available in first-tier and fourth-tier cities gradually, it said, adding over 120 sales outlets for Baojun are now opening for business nationwide.

While continuing to reap profits from pricier Buick and Cadillac models, GM has also been stepping up its presence in smaller, inland cities which are quickly replacing coastal cities as the major industry growth driver.

GM and its partner SAIC Motor <600104.SS> had started to work on a new passenger car brand even before the launch of its new Sail, the cheapest foreign brand in China.

Baojun 630, equipped with a 1.5 liter engine, is the first of a series of models the partners plan to launch in the coming years, combining GM's technologies and China's low cost manufacturing.

Other foreign auto makers, including Nissan Motor <7201.T> and Honda Motor <7267.T>, are also working with their Chinese partners to tap lower-tier cities with affordable quality cars.

($1 = 6.436 Chinese Yuan)

(Reporting by Fang Yan and Ken Wills; Editing by Jacqueline Wong)

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