[19 Dec] Honda to Add New Car Plant, Lift Capacity in China by 20%

Honda Motor Co. plans to build another passenger car factory in Wuhan, Hubei Province, and increase its output capacity in China by 20% to 730,000 cars a year, The Nikkei reported in its Saturday morning edition.

Dongfeng Honda Automobile Co. will build the plant right next to the Chinese joint venture's existing facility. The initial investment is estimated at Y20-Y30 billion.

The new factory is due to begin operating in 2011, in time for the introduction of the next all-new Civic subcompact. Production there is expected to shift into full gear in 2012. The factory may also be used to make cars other than the Civic.

The expansion will lift Dongfeng Honda's annual production capacity from the current level of 200,000 units. The parent company is expected to officially announce the plan early next week.

Honda also assembles the Accord and other vehicles in China at three plants belonging to joint venture Guangqi Honda Automobiles Co. The three facilities sport an aggregate production capacity of 360,000 units a year.

The car maker also manufactures export models for the European market in China. This operation boasts an annual capacity of 50,000 units.

Japanese auto makers are beefing up their production capacities in China, as car sales there are forecast to exceed 13 million units this year and replace the U.S. as the world's biggest auto market.

Nissan Motor Co. aims to increase its annual production capacity in China to 1 million units, including commercial vehicles, in 2010. And Toyota Motor Corp. is working to lift its capacity there to 820,000 units a year in the first half of next year.

All three saw their Chinese sales in October jump 40% to 60% on the year. But their market shares in the January-October period suggest some room for improvement because even Toyota ranked fourth with a share of less than 8%.

Volkswagen AG was the clear leader, holding nearly 17% of the market during the period. The German auto maker's grip on the market may strengthen further, following its recent tie-up agreement with Suzuki Motor Corp.

(Source: irco.biz)