Honda to boost carmaking capacity in China

Honda Motor Co plans to ramp up its annual automobile production capacity in China 36 percent by 2012 to meet sharp demand growth in the country, the Nikkei business daily learned.

The move, which will raise Honda's capacity in China to 830,000 units, is expected to be announced locally as early as next week, the daily said.

The carmaker will expand a plant operated by local joint venture Guangqi Honda Automobile Co, adding a new assembly line at an estimated cost of slightly more than 10 billion yen ($108.6 million), the daily learned.

The upgrade will double the factory's production capacity to 240,000 units, the Nikkei said.

The new equipment is expected to be used to assemble models including the Accord and a new brand to be launched with the joint venture partner, the Nikkei said.

Including production at another factory, Guangqi Honda's total output capacity will grow to 480,000 units through this effort, the Nikkei said. Currently, Honda can produce 610,000 vehicles a year in China.

Other Japanese automakers including Toyota Motor Corp are also boosting their Chinese operations, the Nikkei said.

Toyota, the world's biggest automaker, which had frozen plans to construct a second plant in Changchun, said last month that it will proceed with the project, expanding its Chinese capacity to 920,000 units by 2012.

Nissan Motor Co, Japan's third biggest carmaker, said earlier this month that it began building a second plant in Guangzhou, with an eye to increasing capacity in the country to 900,000 units by 2012, the daily said.

China's auto market, which overtook the United States as the world's largest last year, thanks to a raft of policy incentives, has been a major bright spot amid a global industry downturn.

Sales of new cars continue to grow rapidly in China. The number of vehicles sold there in the January-March quarter is equivalent to Japan's projected demand for all of fiscal 2010. Chinese sales in April surged 34 percent on the year to 1.55 million units, the Nikkei said.