Kia Motors, the affiliate of South Korea's biggest automaker Hyundai Motor Co, and its two Chinese partners, plan to build a new manufacturing base in China to speed up its expansion in the world's fastest-growing car market.

Qingdao International Automobile Industry Expo draws tens of thousands visitors in Qingdao, a coastal city in East China's Shandong Province, July 29, 2003. [newsphoto.com.cn]

Kia, Dongfeng Motor Corp and Yueda Automobile Group will invest around US$600 million in the new plant, said Chung Dal-ok, president of Dongfeng Yueda Kia Motors Co Ltd, the joint venture between the three companies.

"The new base will have a total production capacity of 400,000 units a year and will start production before 2005," Chung said in an interview with China Daily.

"The new base will be built in Jiangsu Province and we are now studying the specific location."

The joint venture now has a 50,000-unit manufacturing base in Yancheng, a city of Jiangsu Province, East China.

Kia, Dongfeng - one of China's largest automakers based in Central China's Hubei Province - and Yueda, a smaller player in Jiangsu, now control 50, 25 and 25 per cent stakes in the joint venture respectively.

"The equity structure of the new base will remain unchanged," he said.

Chung unveiled the plan on Friday when the joint venture launched a new version of its signature product, the Qianlima compact sedan.

The new 1.3 and 1.6-litre Qianlima will retail between 82,800 yuan (US$10,000) and 117,800 yuan (US$14,200) according to the joint venture.

"The model will be a new starting point for our efforts to become one of the top economy car producers in China," Chung said.

Dongfeng Yueda Kia's sales increased by more than 200 per cent year-on-year to 26,078 units during the first half of this year.

The joint venture, which also produces the Pride car, aims to sell more than 50,000 units this year.

"The new base is expected to manufacture Kia's sport utility vehicles as well as sedans and cars," he said.

"We plan to introduce one or two new models in China every year."

Dongfeng Yueda Kia plans to increase its annual capacity of the existing manufacturing base in Yancheng to 150,000 units by 2005.

Kia's move is an important part of Hyundai's aggressive expansion in China.

Hyundai, which is pinning great hopes on the Chinese market to become one of the world's top five automakers by 2010, also operates a joint venture in Beijing with a local partner, producing the Sonata mid-sized sedan.

Hyundai plans to increase the capacity of the joint venture to 550,000 units a year by 2010, up from 50,000 units at present.

The automaker predicts China's annual vehicle market will grow to 8 million units within the next five years.

The market is forecast to exceed 4 million units this year.

The car market is currently controlled by European and US automakers, such as Volkswagen, General Motors and PSA Peugeot Citroen.

Japan's Toyota, Honda and Nissan have also set up joint ventures in China.

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