Honda to make cars in China for export to Europe

Japan's Honda Motor Co is to export China-made cars to Europe and Asia next month, making it the first foreign car maker to launch a full-scale export operation in China, an official said yesterday.

"We have finished construction of our new factory and it will produce cars especially for the foreign market," a spokesman for Guangzhou Honda said.

"Our capacity will initially be 50,000 vehicles a year. Production will begin next month."

He said output would be determined by demand, with the factory in the southern Chinese city of Guangzhou producing the company's popular compact model Fit, which will sell under the name Jazz in Europe.

Southeast Asia too

The cars will be destined not just for European but also Southeast Asian markets, the spokesman, who refused to be named, added.

Under joint-venture arrangement, Honda has a 65 percent stake in the export-only company, Honda Automobile, while Dongfeng Motor and Guangzhou Auto Group hold 25 and 10 percent respectively.

Previously, foreign car manufacturers in China engaged only in marginal export activity with their joint venture partners, focusing instead on selling in the rapidly growing domestic market.

Lower-end cars

However, as the quality and availability of locally made components increase, exporting cars from China has become more feasible, especially for low-end or economy cars, analysts say.

Honda be the first to set up operations exclusively for export in China but others such as German luxury automaker Mercedes-Benz have also said they are mulling new ventures that would concentrate on the export market.

Last month, Mercedes said it was considering building new compact Chrysler models destined exclusively for the North American market, a move which could fuel US union fears of a relocation of jobs and an invasion of cars "made in China" to match that of other consumer goods and textiles.