Through an investment of 3 billion yen (214 million yuan), annual capacity of Hangzhou Yokohama Tire Co. will increase from 3 million to 4.1 million passenger and light truck tires from 2011.

Hangzhou Yokohama has already undergone three capacity expansions since it started operation in 2003.

"The number of automobiles owned in China is expected to continue increasing at an annual rate of more than 10 percent, stimulating a significant growth of the tire market as well," says the company in a release.

Yokohama makes its ASPEC A349, a low rolling resistance tire in China for passenger vehicles.

"ASPEC A349 is produced in our Hangzhou factory and we provide the product for Guangzhou Honda," says Yoshikuni Nakamura, general manager of the merchandise planning department at Yokohama Tire Sales Shanghai Co.

A joint venture between Honda Motor Co. and Guangzhou Automobile Industry Group Co., Guangzhou Honda makes Accord, Odyssey and Fit and City cars. In the first seven months of this year, its sales increased 13.5 percent year-on-year to 195,749 units, says Guangzhou Honda in a statement.

Besides the Hangzhou plant, Yokohama also has a bus and truck tire plant in the east China city of Suzhou.