"If Guangzhou Honda (the joint venture) wants to do its own development, we will support it," Honda President Takeo Fukui said yesterday as the venture launched a second plant in Guangzhou, capital of South China's Guangdong Province.

The venture will concentrate on local development with its increasing localization of spare parts and the improving capability of suppliers in China, he said.

He made the remarks in response to the Chinese industry regulators' call for Sino-foreign car ventures to enhance local development capabilities instead of only assembling foreign-brand models.

German carmaker Volkswagen said last year it intended to support its two car ventures in China to improve their development ability and foster their own brands.

Guangzhou Honda's second plant has an annual production capacity of 120,000 cars with an initial investment of 2.2 billion yuan (US$275 million), taking the joint venture's total capacity to 360,000 units.

The venture, which is making Honda's Accord mid-sized sedan, City compact sedan, Fit sub-compact car and Oddyssey multi-purpose vehicle, sold 160,655 vehicles in the first eight months of this year, up 7.6 percent from a year ago.

It aims to increase sales to 260,000 units for 2006 from 230,000 units in 2005.

According to Fu Shoujie, executive vice-president of Guangzhou Honda, the venture plans to launch at least one new model annually over the next few years.

Fu said the venture would use more locally made spare parts in its vehicles to cut costs.

At present, more than 80 percent of the spare parts used in the venture's cars are made in China, up from 40 percent in 1999.

Honda runs another joint venture with Dongfeng Motor Corp China's third-biggest vehicle producer in Wuhan, the capital of Hubei Province. The venture assembles Honda's CR-V sport utility vehicle and Civic compact sedan.

Sources from Honda Motor (China) Investment Co Ltd said the Japanese carmaker's overall sales in China climbed by 17 percent year-on-year to 194,000 vehicles from January to August this year. The nation is now Honda's third-biggest single market in the world after the United States and Japan.

Honda aims to boost sales to 353,000 units in 2006 from 260,000 units last year.

According to industry data, sales of made-in-China vehicles jumped by 25 percent to 4.53 million units in the first eight months of the year, including 3.23 million passenger cars.

Full-year sales are forecast to exceed 7 million units.

(China Daily September 20, 2006)