Honda to build new engine plant in China: Report

TOKYO: Japanese automaker Honda Motor Co. will spend about 270 million dollars to build an engine factory in China, a report said on Wednesday.
    
Honda will build the new factory in the southern Chinese city of Guangzhou and start production in 2009 with capacity of 200,000 units a year, the Nikkei economic daily said without naming its sources.
    
The automaker plans to invest USD 270 in the new plant, which would increase its output capacity for automobile engines by 40 percent, according to the report.
    
The move would enable Honda to eventually double its production of finished automobiles in China to 700,000 units a year, it said.
    
Honda, the fourth-biggest carmaker in China in terms of production, aims to close the gap with top-ranked Volkswagen AG of Germany, it said.
    
Guangzhou Honda Automobile Co., which is Honda's 50-50 joint venture with Chinese automaker Guangzhou Automobile Group Co., will establish the new engine production plant, the Nikkei said.
    
Honda, however, denied there was a plan to build a new plant.
    
"Guangzhou Honda has obtained a licence (from the Chinese government) for engine production but it does not have a plan at the moment to build an engine plant as reported," Honda said in a statement.
    
The Nikkei said the joint venture would manufacture eco-friendly and fuel-efficient 1.3 and 2.4-litre gasoline engines for popular models such as the Accord, Odyssey and Fit.