TOKYO, Aug 8: Japanese carmaker Honda said on Friday it had launched a joint venture in China to produce its small sport utility CR-V vehicles to meet expanding and diversifying demand there.

The joint firm, based in the central Chinese city of Wuhan, is capitalized at $28 million and is equally owned by Honda Motor Co. Ltd. and Dongfeng Motor Corp., the Japanese firm said in a statement.

Named Dongfeng Honda Automobile (Wuhan) Co. Ltd., the new company will start production in the first half of 2004 at an existing plant, now owned by Wuhan Grand Motor Co. Ltd., with an annual output of 30,000 units, the statement said.

Honda and Donfeng will jointly invest $44 million in upgrading the plant for SUV production. The joint venture will create some 600 jobs.

The statement said the new SUV project was aimed at meeting the “expanding demand and diversifying needs of the Chinese automobile market which is expected to continue to grow rapidly in the future.”

Honda and Dongfeng have had an auto parts production tie-up in China since 1994. In 1998, they set up a joint firm in Guangzhou, southern China, to produce engines for Honda’s Accord sedans and Odyssey minivans.

The Wuhan deal is Honda’s second joint venture for automobiles in China following Guangzhou Honda Automobile Co. Ltd., a 50-50 set up with Guangzhou Auto Group Corp. to produce Accord sedans and Odyssey minivans.—AFP