Honda Opens New China Factory

Honda Opens New China Factory to Keep Ahead of Toyota

By Kelvin Wong and Tian Ying

Honda Motor Co., Japan's third- largest automaker, opened a new factory in China, as it seeks to maintain its lead over Toyota Motor Corp. and Nissan Motor Co. in the world's fastest growing major vehicle market.

The new factory, located in the southeastern city of Guangzhou, will have a capacity of 120,000 vehicles a year, the company said in a statement. Guangzhou Honda Automobile Co., Honda's venture with Guangzhou Automobile Group Co., invested 2.2 billion yuan ($277 million) in the factory, which will make Accord models.

Honda, the first Japanese carmaker to set up a venture in China, is opening the plant after capacity shortages stunted its sales growth in the first half. The factory may enable Honda to maintain its lead over Toyota and Nissan, which are also investing in the world's third-largest vehicle market.

Honda set up its first venture in China in 1998, five years ahead of Toyota and Nissan. The company had about 5.7 percent of China's passenger car sales in the first half, compared with Toyota's 4.5 percent and Nissan's 4.1 percent, according to the China Association of Automobile Manufacturers. Market leader Volkswagen AG had a share of 17.1 percent, the carmaker said.

Honda sold 143,519 vehicles in the first six months of the year, less than half its full-year target of 350,000 units, because of capacity shortages, it said in July. The company's sales were 22 percent higher than a year earlier.

The new factory will give Guangzhou Honda a total capacity of 360,000 units a year.

Toyota's Growth

Toyota expects its sales in China to rise 52 percent this year from last year to 278,000 units, Executive Vice President Yoshimi Inaba said in July. The world's biggest automaker by market value has invested 215 billion yen ($1.8 billion) in China and it is aiming to boost i"