Manufacturing News

China's Changan Auto eyes new factory with Suzuki

It is said by the state media that the investment might be worth $366 million.

BEIJING, Sept 28 (Reuters) - China's Chongqing Changan Auto plans to double capacity at its venture with Japan's Suzuki Motor Corp. by building a new factory in what state media said on Wednesday could be a $366 million investment.

Chongqing Changan Automobile Co. Ltd. , also Ford Motor Co's main Chinese partner, holds a 51-percent stake in the joint venture with Suzuki, which mainly makes compact cars such as the Alto. The new plant would have a capacity of 200,000 units annually, the same as the venture's existing factory, an official in the board secretary's office said.

"We are planning to build a new factory, but where and when we do it as well as the investment amount has yet to be decided," the executive, who declined to be named, told Reuters by telephone from the southwestern city of Chongqing.

The official China Daily said the investment could be worth up to 2.96 billion yuan ($365.8 million).

Changan expects to unveil two self-designed cars next year, Chairman Yin Jiaxu said last week in Shanghai, as the company looks for a way to develop its own research ability and move away from relying only on foreign partners for car production.

The company, the country's largest minivan maker and fourth-largest auto manufacturer, posted a 77 percent drop in second-quarter earnings, as higher costs and increased competition ate into profits.

Growth in car sales in China slowed dramatically to just 15 percent in 2004 after a near-doubling in 2003 as Beijing cracked down on easy car loans around the middle of last year.

Experts now expect the market to grow just 10-15 percent in 2005 as Beijing keeps up credit curbs aimed at bringing about a soft landing of the world's seventh-largest economy.

Global auto makers including General Motors Corp , Nissan Motor Co. Ltd. and Toyota Motor Corp. are investing some $15 billion to triple annual production in China to 7 million cars by 2008, triggering fears of a glut.

Changan is now teaming up with Ford and Japan's Mazda Motor Corp. to build a plant in Nanjing -- some three hours by road from China's richest city, Shanghai -- which would have an eventual capacity of 400,000 vehicles a year. ($1=8.0920 Yuan)

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