(Agencies)
Updated: 2008-01-15 09:41

Mitsubishi Motors Corp will set up an automaking venture in China with Hunan Changfeng Motors Co due to rising demand for sport-utility vehicles (SUVs) in the world's second-largest auto market, its Chinese partner said.

"Both Changfeng and Mitsubishi will gain," Changfeng Chairman Li Jianxin said in an interview at the Detroit motor show yesterday. "Mitsubishi will be able to sell more vehicles in China, while we can tap their management and technology to help our expansion in other markets."

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Mitsubishi, Japan's fastest-growing auto exporter, follows Toyota Motor Corp and Nissan Motor Co in adding capacity in China, as economic growth boosts demand for vehicles. The venture may also help Changfeng, which generates 70 percent of sales from the government, sell more vehicles to companies and individuals.

"Having a venture like that will help Mitsubishi sell more vehicles in China," said Wang Liusheng, an analyst with China Merchants Securities Co in Shenzhen. "Changfeng will be able to add more models in its lineup."

The venture will initially make as many as 100,000 sedans and SUVs a year, Li said at the North American International Auto Show. This tally may eventually double, he added, declining to provide a timeframe for the project.

US plant planned

Changfeng Motors Group Co, Changfeng's parent, plans to build assembly plants in the US and Europe to gain access to the world's most advanced automobile markets.

"We have been investigating on setting up an assembly here since our year-earlier show," said Li, who is also chairman of the parent company. He said he will reveal details at next year's Detroit auto show.

The company, which doesn't have any overseas plants now, is also talking to some European companies about assembling vehicles from kits of pre-assembled parts, Li said without elaborating.

Changfeng joins Geely Holding Group Co and China FAW Group Corp in announcing plans for overseas plants as rising domestic competition causes Chinese automakers to seek new markets overseas.

Geely, China's largest privately owned automaker, said yesterday it plans to build a plant in Mexico and export cars to the US, the world's biggest auto market. The factory, with an initial investment of $500 million, will be able to build up capacity to as many as 300,000 units, the company said.

"Eventually, Chinese automakers will set up factories in the US," said J. Scot Sharland, executive director of the Automotive Industry Action Group in Southfield, Michigan. "It is too expensive to import vehicles."

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