Kia Car Manufacturing Expansion in China

Kia Motors is building a second plant in China. Kia hopes to cash on the country's fast-growing vehicle market.

The subsidiary of South Korea's largest vehicle maker, Hyundai Automotive Group, has an agreement with the city of Yancheng in Jiangsu province, committing itself to building a second vehicle plant there.

With an annual production capacity of 300,000 units, the plant would be built next to the company's existing factory in Yancheng, which could produce up to 130,000 vehicles a year.

The $645 million project will be completed in 2006.

Globally the Hyundai-Kia Motors group seeks a production capacity of five million units by 2010. This would include three million units produced in its plants in South Korea.

In China, Kia controls 50 per cent of a joint venture with Dongfeng Motors, one of China's largest vehicle makers based in Hubei province, which has a 25 per cent stake and Yueda Automobile Group, a smaller player from Jiangsu that also owns 25 per cent.

Dongfeng Yueda Kia's sales are up more than 200 per cent so far this year at 26,078 units and the group is targeting sales of 50,000 for the full year.

Parent company Hyundai, which also operates a joint venture in Beijing with a local partner producing the Sonata mid-sized sedan, is aiming to increase production in China to 550,000 units a year by 2010.

Hyundai predicts China's annual vehicle market will grow to eight million units within the next five years and reach more than four million this year.