Honda Motor Co. (IW 1000/19) has revived plans to expand production in China, beginning work on a new plant this year that will start operating in 2019.

The factory will have initial annual capacity to make 120,000 vehicles and could eventually produce 240,000 units a year, Chen Binbo, executive vice president of Honda’s China joint venture, said Tuesday in a phone interview. Honda said last year it would delay construction of a planned $822 million plant in Wuhan as industrywide demand slowed.

Demand for XR-V and Vezel sport utility vehicles have paced a 26% gain in Honda’s China sales this year through September. Industry sales began to recover in the fourth quarter of last year following the introduction of a tax cut on purchases of vehicles with smaller engines that’s scheduled to expire Dec. 31. Passenger-vehicle sales have surged 15% to 16.75 million units in the first nine months of this year.

Honda’s new models for China this year include an updated Civic compact and all-new Avancier and Acura CDX SUVs. The Tokyo-based company also is beginning to produce hybrid engines locally for Accord sedans.

Hyundai Motor Co., which counts China as its biggest market, said separately it plans to introduce a new SUV model to its plant in Cangzhou, in northern Hebei province. The Seoul-based automaker began producing the Verna Yuena sedan at the factory on Tuesday, according to a company statement. The plant will boost Hyundai’s annual output in China to 1.65 million vehicles by 2018.

by Ma Jie

Soucr: IndustryWeek