"We want to make our own-brand cars in China eventually and the plan is proceeding smoothly," a company spokesman told Reuters.
He declined to give a timetable, but the official China Daily said on Friday the venture could launch a non-Hyundai branded car in 2008.
Beijing Hyundai Automotive Corp., a 50/50 venture between South Korea's biggest auto maker and state-owned Beijing Automotive, is building a 510 million yuan ($65.86 million) new research and development facility in the Chinese capital partly for the new models, the spokesman said.
To protect its own auto industry, the Chinese government requires foreign auto makers operating in China to team up with local partners and caps their holdings at 50 percent. Most of the auto ventures have their own R&D facilities but none has launched independently developed cars so far.
Beijing Hyundai, which is doubling its production capacity from the current 300,000 vehicles per year, sold roughly 290,000 cars in China last year, up 24 percent from 2005.
Sales are expected to climb only 6.9 percent to 310,000 units in 2007, mainly due to capacity constraint.
The venture is building a second plant in Beijing to add 200,000-unit-a-year capacity by early 2008, and that would be boosted to 300,000 units a year by the end of the same year.
The China Daily also said Honda Motor, the number two Japanese auto maker, also planned to develop a non-Honda brand in its venture in south China, which currently makes Accord and Odyssey cars among other models.
The newspaper cited Fu Shoujie, executive vice president of venture, as saying that his company would own the intellectual property right to the new brand.
But Honda's spokesman in China discounted the report, saying the venture had not worked out any plans about its next move.