Honda Motor Co. said it would build a second auto plant in Guangzhou, which, along with other expansion plans, would almost double its production capacity in China by 2006.

The move will help Honda maintain the strong position it has built as one of the front-runners in the world's fastest-growing car market. Honda is operating at full capacity in China with popular demand for its Accord sedans and Odyssey minivans,

It said earlier its Chinese joint venture, Guangzhou Honda Automobile Co., which is 47.5 percent owned by Denway Motors Ltd., would invest some $265 million in the new plant to give it an annual production capacity of 120,000 units. It is expected to be operational in the second half of 2006.

"By adding a new plant, total production in Guangzhou would reach 360,000 units in 2006 and would enable the company to respond to strong demand for its current product line-up as well as meet long-term demand in the Chinese automobile market," Honda said in a statement.

"The new plant is a very natural move for Honda," said auto analyst Takaki Nakanishi at UBS Securities.

"China is a growing market and if (Honda) does not expand it will lose market share."

Editor: Donald