SHANGHAI (Reuters) -- Kia Motors is planning a new factory in China with annual capacity of 400,000 units, ramping up production to tap the booming local car market, the company said on Monday.
"400,000 units a year by 2005 is the plan," Wang Liping, planning department manager at Dongfeng Yueda Kia Automotive Co Ltd, told Reuters. "Chinese car makers are increasing in scale and we're following that trend."
The joint venture will invest $600 million in a new plant at an undecided location to meet this target, the official China Daily quoted company president Chung Dal-Ok as saying.
Kia Motors Corp., an affiliate of Hyundai Motor Co., already builds cars in a joint venture with Dongfeng Motors Co. and Jiangsu Yueda Investment Co. in the eastern province of Jiangsu, near China's financial hub Shanghai.
The existing facility, in Yancheng, aims to roll out 50,000 cars this year and 100,000 next year, Wang said, declining to confirm the investment figure for the new factory.
A total of 842,800 cars were sold in the first half in China, up 82 percent from a year earlier. Car sales broke the million mark in China for the first time only last year.
Auto output roared up 83 percent to 903,400 over the same period, the State Statistical Bureau said last month, exceeding sales.
Kia parent Hyundai has a joint venture in China's capital with Beijing Automotive Industry Holdings which started operations at the end of 2002 and has a capacity of 50,000 units a year, expected to rise to 300,000 by 2005.
Foreign auto makers have announced plans to more than double production over the next four years, raising fears of a margin-sapping glut, but they hope economic growth of eight percent a year will absorb the additional output.
Volkswagen AG plans to double its annual production in China, its largest market after Germany, to 1.6 million vehicles in five years, to keep its pole position in the Asian giant.