Honda to boost China capacity by 20 pct - Nikkei

TOKYO, May 8 (Reuters) - Honda Motor Co will boost its annual output capacity in China by about 20 percent to 650,000 vehicles, aiming for a larger share of the fast-growing market, the Nikkei business daily said on Thursday.

Honda, Japan's No.2 carmaker, currently manufactures some 530,000 vehicles a year at two Chinese joint ventures, Guangzhou Honda Automobile Co and Dongfeng Honda Automobile Co.

Dongfeng Honda will double its capacity to 240,000 units as early as this year, investing some 10 billion yen ($95.5 million) to add production lines at an existing plant, the paper said.

A Honda spokeswoman said the company was studying the issue of expanding production at Dongfeng but nothing had been decided.

She said the company planned to expand its dealerships in China up to 700 by the end of this year from the current 500 or so and hoped to sell roughly 490,000 units in China in 2008, up 15 percent from 2007.

Honda warned last month of a weak year ahead due to a stronger yen, rising materials costs and a soft U.S. car market. An unexpected tax bill sent its quarterly profit tumbling 86 percent. ($1=104.66 Yen)