Honda plans new production in China

PUBLISHED : Friday, 19 July, 2013, 12:00am
UPDATED : Friday, 19 July, 2013, 5:36am

Honda Motor is planning to produce Acura cars on the mainland with a local partner starting in 2016 in an effort to tap growing demand for upscale vehicles in the world's biggest car market.

The Japanese carmaker said yesterday it had agreed with Guangzhou Automobile to jointly produce Acura cars in China. It did not disclose details.

A Honda spokeswoman said one Acura model that is likely to be produced in China is a new compact SUV that was not in the brand's line-up yesterday.

The new model is likely to be based on a "concept" car, the Acura SUV-X that the firm showed off at the Shanghai motor show in April, she said.

Chief executive Takanobu Ito said at the Shanghai show that the carmaker planned to produce Acura cars in China within the next three years.

Honda's move comes as a slew of global premium car brands rush into the mainland. One key factor for foreign carmakers to ensure an upscale brand succeeds in China is local production.

Because of high tariffs charged on cars brought in from overseas, it is difficult to generate volume unless a carmaker produces the cars on the mainland.

Audi, Mercedes-Benz and BMW all produce models on the mainland with local partners.

General Motors has also recently begun producing Cadillacs on the mainland.

Among Japanese carmakers, Nissan Motor is building a factory in Dalian, Liaoning province, to produce some models for its premium Infiniti brand.

Demand for premium cars on the mainland is likely to reach 2.7 million a year by 2020, a level that would allow China to displace the United States as the world's biggest market for upscale cars.