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Dongfeng-Honda to build a $168 million new plant in Wuha

WUHAN, Hubei – Dongfeng-Honda Automobile Co., Ltd. plans to build a second plant in Wuhan to meet surging demand in the world’s largest auto market, the company announced on January 20.

The new plant, a second facility for Dongfeng-Honda and the fifth for Honda Motor Co., will be built on a 1-million-square-meter site located about four kilometers northeast of its current Wuhan facility.

With an initial investment of ¥1.15 billion ($168 million), the new plant is scheduled to start production in the second half of 2012 with an initial capacity of 60,000 units. The Sino-Japanese JV automaker also eyes boosting the annual output capacity of its current plant from 200,000 to 240,000 units this year.

Dongfeng-Honda, a 50:50 joint venture between Honda and China’s Dongfeng Motor Group, churns out the Honda CR-V SUV, Civic and Spirior sedans in China. It sold 210,120 vehicles in 2009, up 28.11 percent year-on-year, according to CBU-Autostats.

Honda’s total Chinese output capacity will stand at 710,000 in 2012 upon completion of the new plant, up 16 percent from last year’s 610,000. Its capacity will be derived from its joint production with Guangzhou Automobile Group and an export-only facility in Guangzhou.

China has replaced the U.S. as the world’s largest auto market, with sales surging 46 percent year-on-year to 13.64 million units in 2009. And that number is expected to hit 15 million this year.

Japa’s Toyota plans to expand its annual output capacity in China from 800,000 units to nearly 1 million in a year or two, while Nissan eyes boosting production to over 700,000 units in 2012 from the current 530,000.

A number of other multinational players have announced more aggressive expansion plans than the Japanese automakers. Volkswagen AG plans to double its capacity in China with a roughly $6 billion investment through 2011, and Hyundai intends to build a third plant in China with an investment of $772.8 million.

 

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