Honda's China car venture quadruples capacity

SHANGHAI, Feb 27: Honda Motor Co.'s China venture said on Monday it has completed a 2.8 billion yuan ($348 million) expansion to quadruple annual production capacity to 120,000 vehicles.

Dongfeng Honda Automobile Co. Ltd., based in central Hubei province, said in a statement it expected to begin producing Civic sedans at the expanded facility in spring.

Foreign auto makers such as General Motors Corp., Ford Motor Co.

and Volkswagen A.G. are investing $15 billion to triple annual capacity to over 7 million cars by 2008 -- sparking fears of a glut and forcing manufacturers to slash prices.

Car sales in China, the world's third-biggest vehicle market, grew 21.4 per cent last year, picking up from relatively slow 15 per cent growth in 2004.

Industry executives forecast similar growth this year in a market driven mostly by demand for cheap and mid-price cars.

Guangzhou Honda, the Japanese firm's other local venture in China, sold 18,498 cars in January, up 55.7 per cent from a year earlier, it said last week.

($1=8.0424 Yuan)

REUTERS