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Honda said to build engine plant in Guangzhou, China

Japanese automotive giant Honda Motor Co., Ltd. will invest ¥30 billion (about $264.8 million) to build an engine plant in Guangzhou, the capital city of south China’s Guangdong Province, a Japanese media reported.

Guangzhou Honda Automobile Co., Ltd., a 50-50 joint venture between the Japanese auto giant and China’s Guangzhou Automobile Industry Group Co., Ltd., plans to bring the new plant into operation in 2009. By then, Honda will greatly boost its engine production capacity in China, the world’s second-largest auto market. With advanced equipment, the plant will mainly make 2.4L and 1.3L engines for car models like Accord, Odyssey, and Fit. It will have a production capacity of 200,000 units. However, Honda denied the news on the establishment of new engine plant, according to a report by a French news agency.

The Japanese carmaker achieved a record production of 352,500 vehicles in China last year, hiking 132% versus 2005. It aims to manufacture 42,000 vehicles in China for export this year, marking a jump of 70%. Its export model two- compartment Fit will entirely be turned out in the Guangzhou production base. Honda China spokesperson Zhu Linjie (transliterated) disclosed they would increase their export destinations to 12 European countries in 2007. China-made two-compartment Fits were shipped to Germany in June 2005, and later to more and more countries. Honda exported the products to Germany, Belgium, the Netherlands, and Austria at the end of 2005, and further to Italy in 2006. This year, the auto giant is selling such products to customers in Austria, Switzerland, Spain, Germany, and the UK.

In July 2007, Guangzhou Honda set up a wholly-owned R&D arm, paving the way for its proprietary models in the coming years. It was the first time for a joint venture to create its independent R&D unit in China. The newborn, known as Guangzhou Honda Automobile Research and Development Co., Ltd., has registered 180 million yuan ($24.4 million) in capital, and will have an initial investment of 2 billion yuan ($271 million). It will be engaged in businesses such as model design, model trial production, vehicle testing, and parts R&D. Guangzhou Honda ranked sixth nationwide with production and sales of 224,300 cars last year. Its high-grade brand Accord was the sales champion in the Chinese medium- and high-grade sector. Notably, the venture brought its second plant into operation in September 2006, driving its Japanese parent’s total production capacity in China up to 530,000 vehicles a year. (