BLOOMBERG

Honda Motor, the first Japanese carmaker to set up factories in China, is considering a plan to expand production in the world's third-largest vehicle market, according to spokesman Tetsuya Ikeda.

Honda, which has two joint venture plants in China with combined annual capacity to make up to 270,000 Accord, Fit, Odyssey and CR-V vehicles, may invest 20 billion yen ($189 million) to almost double production to 530,000 units, the Nihon Keizai newspaper said, without saying where it got the information.

Mr Ikeda declined to confirm details.

Honda wants to broaden its range to include the Civic compact car to catch up with Volkswagen and General Motors Corp, the country's two biggest overseas carmakers. The company also faces increased competition from Toyota Motor Corp, which is aiming for 10 per cent of China's sales by 2010.

"Honda will be making all of its top-selling models once it introduces the Civic in China," said Koji Endo, an analyst at Credit Suisse First Boston in Tokyo. "Honda has been saying that it will expand capacity when it needs to and that's been very effective."

The Civic will be the sixth model Honda makes and sells in China when it begins production in 2006.