Hyundai Motor Co. launched a new compact car called Verna at the Beijing Auto Show.

The new Verna will begin local production in July with sales starting in the second half of this year, said J.M. Koh, president of Beijing Hyundai Motor Co. speaking to Automotive News China in an interview at the show.

The 4340mm long model will be offered with a 1.4-liter engine with the choice of a 5 speed manual or a 4 speed automatic gear box. The car will be built at the automaker's No. 1 plant in Beijing.

The Verna was designed by teams in both China and Korea, said Koh. It shares the same platform with Hyundai's existing Accent model. But with a higher brand positioning, the Verna will be sold in major Chinese cities while the Accent will concentrate on cities in inland areas, said Koh.

The car has been made exclusively for the Chinese consumers and will only be launched in other countries if it does well here, Koh added.

The China market is increasingly important for Hyundai. "Until this year Korea is still our biggest market-but next year could be China," he said.

In China, the automaker's sales target for 2010 is 670,000 units. Beijing Hyundai Motor Co. posted sales of 570,309 units in 2009, a 94 percent year on year growth.

As sales and production have increased in China, the automaker has also increased localisation of parts. "When we first entered the Chinese market our localisation ratio was just over 40 percent, it is now over 80 percent," said Koh.

"We currently have about 150 suppliers, of that figure 50 are Chinese or multinational companies and 100 are Korean companies that have entered the market with us," he said.

As domestic automakers gain competency in producing and marketing their cars in China, Koh fears Korean brands will be the first to feel the pressure.

"In order for us to become more competitive, we need to take our product higher," he said, adding that Hyundai cars in China will need to become more modern with added space in the car interiors.

A new plant planned for Beijing will begin production in 2012 with annual capacity of 300,000 units. "We plan to build a new model in the new plant -- so we will have a new model in 2012," said Koh. This will be Hyundai's third plant in China with its joint venture partner Beijing Automotive Industry Holding Corp. Details for the new model have yet to be released.

Established in 2002, Beijing Hyundai is a 50-50 joint venture between Hyundai Motor Co. and Beijing Auto.