With investment estimated at 3.5 billion yuan ($549 million), the new plant is expected to start production late next year. It will initially produce 150,000 vehicles annually, lifting the company's total annual passenger vehicle output to 400,000 units, Lifan said in a statement.

Lifan's existing car assembly plant in Chongqing builds up to 250,000 vehicles a year. It produces Lifan's 320, 520 and 620 cars and the X60 SUV.

Lifan, which is headquartered in Chongqing, is listed on the Shanghai stock exchange. Aside from passenger vehicles, Lifan also produces microvans and light trucks.

In the first nine months, Lifan sold 118,461 light vehicles, including 71,459 passenger vehicles and 47,002 microvans and light trucks, according to J.D. Power. Sales rose 51 percent from the same period last year.