Chinese carmaker to invest $300 mn in Mexico plant

Tijuana, Mexico, June 16: A Chinese automaker will invest 0 million in an auto plant it is setting up in Mexico near the U.S. border, giving the Asian country a beachhead in North American vehicle production.

China's Zhongxing Automobile will start churning out sport utility vehicles and pickups in 2009 at the assembly plant in Tijuana, the company's U.S. partner in the venture, Chamco Auto, said.

Zhongxing plans to export 25 percent of the Tijuana-assembled vehicles to the United States, building off another venture to export 50,000 vehicles duty-free to Mexico.

Those models are expected to hit Mexican showrooms this year.

The Tijuana plant will have a capacity of 150,000 vehicles per year, Chamco said.

On Tuesday, Chamco Auto said it had reached a deal to import the trucks and establish a plant, but did not give figures.

Assembling the Zhongxing vehicles in Tijuana will make them Mexican under North American free trade rules, so they can be exported to the United States duty free, the company says.

They will be similar to popular models made by U.S. and international automakers and will be cheaper, Chamco said.

''We want to bring this type of project to Mexico because we see a real future in them,'' Oscar Margain, head of Chamco's Mexican operations, told Reuters.

China's domestic car industry is heating up and is looking to break into the lucrative North American market.

Mexico is already a major auto manufacturer, with Nissan Motor Co. Ltd., Ford Motor Co., Volkswagen AG and other big names exporting a combined 1.5 million cars and trucks to mostly U.S. consumers last year.

Reuters>