SEOUL (Bloomberg) -- Hyundai Motor Co. is considering building a fourth car plant in China to meet demand in the world's biggest auto market.
Chairman Chung Mong-koo will sign an agreement on Thursday with the government of Chongqing to study the possibility of locating a plant there, Hyundai said in a statement. The city is the most likely site for the factory, the automaker said.
Hyundai faces rising competition in China, its largest market, as sales at Toyota Motor Corp. and Nissan Motor Corp. have recovered from anti-Japanese boycotts touched off in 2012 by a territorial dispute.
The Korean carmaker joins rivals including Volkswagen Group and General Motors Co. in seeking to make and sell more cars in China as economic growth and urbanization stokes demand for vehicles.
"To increase or at least keep its market share, the decision to build a new plant would have been inevitable for the company," said Lee Sang Hyun, an analyst at NH Investment & Securities Co. "Although China's auto-market growth has slowed compared with a few years ago, it is still a rapidly growing market."
The fourth plant would have capacity of 300,000 cars a year, bringing Hyundai's China output to as many as 1.51 million vehicles, according to the statement. Hyundai's three existing car plants are located in Beijing. Its commercial vehicle business also has a new plant under construction in Sichuan, China.
The carmaker's annual sales in China surpassed 1 million vehicles last year for the first time, according to data compiled by Bloomberg. By comparison, it sold 640,698 units in South Korea and 720,783 in the United States. In EU and EFTA markets, the carmaker sold 422,930 vehicles in 2013, a drop of 3 percent over the previous year, according to data from industry body ACEA.
Automotive News Europe contributed to this report