Guangzhou Honda, the Japanese carmaker Honda Motor's joint venture in South China's Guangdong Province, said that it plans to produce 200,000 cars next year to meet mounting domestic demand.

The output will include 100,000 Accord mid-sized sedans, 80,000 Fit Saloon compact sedans and 20,000 Odyssey multi-purpose vehicles, said Zeng Qinghong, executive vice-president of the joint venture, with Guangzhou Automobile Group.

Zeng predicted the joint venture's output this year will reach 117,000 units, a 98 per cent rise from last year.

The output will make Guangzhou Honda the fourth biggest Sino-foreign carmaker in China after a pair of Germany's Volkswagen joint ventures in Shanghai and Northeast China's Jilin Province and another by US General Motors in Shanghai.

"We will invest 1.33 billion yuan (US$160.6 million) next year to build new manufacturing facilities and introduce new models,'' Zeng said.

Guangzhou Honda's annual production capacity will increase to 240,000 units next month with a total investment of 1.8 billion yuan (US$217.4 million).

But Zeng did not reveal specifics about the new models planned for next year.

Last year, the joint venture launched the new Accord and the Fit Saloon.

"The domestic passenger car market is growing beyond our expectations," he said.

Zeng estimated that China's car market volume next year will reach 2.8 to 3 million units, up from some 2.3 million units this years.

"China's steady economic growth and improvements in its car buying environment will continue to provide good opportunities for us," he said.

The joint venture's Accord and Fit Saloon are in short supply domestically.

"At the same time, we will also face great challenges from further decreases in China's tariffs on car imports and increasing efforts of the other manufacturers in new products and services,'' he added.

Guangzhou Honda will increase the number of its franchised sales stores to 250 at the end of 2004 from 200 at present, Zeng said.

The joint venture's accumulated output has reached almost 270,000 cars since 1999 when it started operation.

Honda's three-party joint venture in Guangzhou with Guangzhou Automobile Group and Dongfeng Motors -- one of China's biggest automakers -- will begin producing small-sized cars next year with an initial annual output of 50,000 vehicles

The Japanese carmaker also has a joint venture with Dongfeng in Central China's Hubei Province.

It will start to make Honda's CRV sport utility vehicles next April.

China will cut its tariffs on auto imports to 34.2-37.6 per cent on January from 38.2-43 per cent to comply to commitments it made to the World Trade Organization.

Editor: Wing