Japan's No 3 carmaker Honda Motor Co. plans to create a new brand in China through a local joint venture to further tap the world's second-biggest vehicle market.

Fu Shoujie, executive vice-president of Honda's partnership with Guangzhou Automobile Corp., said the new brand would be an indigenous one without the Honda logo.

"The new brand's intellectual property will be held by the joint venture, instead of by Honda alone," Fu told China Daily.

The 50/50 venture, Guangzhou Honda Automobile Co., will announce a plan for the new brand later this month or in April, he said, declining to provide details.

He stressed that Guangzhou Honda is expected to be the first major Sino-foreign car venture to create a home-grown brand.

The venture, based in the southern city of Guangzhou, makes Honda's Accord mid-sized sedan, City compact sedan, Fit subcompact car and Odyssey van.

John Bonnell, an analyst with Automotive Resources Asia, a consulting firm owned by JD Power and Associates, said it could be "monumental news", as all major Sino-foreign car ventures only assemble models under overseas badges.

"Guangzhou Honda seems to be working the way policymakers intended. Government policy is meant to develop independent automotive companies, not companies that depend on the foreign technology source in perpetuity," Bonnell said.

Government calls have been growing for domestic automakers and their joint ventures with foreign partners to speed up development of indigenous brands to alter the scenario that foreign marques now control three-quarters of China's passenger car market.

The government expects home-grown brands will account for more than 60 percent of the market by 2010.

South Korean carmaker Hyundai Motor Co.'s joint venture with Beijing Automotive Industry Corp. said it also plans to launch a non-Hyundai branded car in 2008.

Honda said it was the right moment for its venture to develop a home-grown brand.

"The time is ripe for Guangzhou Honda to do so as it has had a strong product development and profit-making capability as well as a big customer base," said Zhu Linjie, spokesperson for Honda Motor (China) Investment Co.

The venture announced in December that it plans to set up a new research center to boost its development capability with increasing localization of auto parts. More than 80 percent of the parts it uses are currently made in China.

Formed in 1998, Guangzhou Honda is one of the most profitable Sino-foreign joint ventures. It posted more than 5 billion yuan in 2006 post-tax profit, according to industry data.

The venture aims to sell 310,000 vehicles this year, up from 261,000 units in 2006. It has an annual production capacity of 360,000 units.

Commenting on Guangzhou Honda's planned home-grown brand, Zhang Xin from Guotai & Jun'an Securities Co. said: "It should be a small car, as Chinese customers still favor foreign brands in the medium- and high-end segments."

Honda also has a joint venture in the central city of Wuhan with Dongfeng Motor Corp.

The venture's line-up includes the CR-V sport utility vehicle and the Civic compact sedan.

The Japanese carmaker's 2006 sales in China totaled 323,469 vehicles, up 25.9 percent from the previous year.

Meanwhile, sales of all China-made vehicles climbed by a quarter to 7.22 million units, including 4.2 million passenger cars.

Editor: Donald