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The new research centre will help the joint venture, or Guangzhou Honda, enhance its own development capability and offer products more suitable for local customers, the venture's top executives said.They did not say how much they would spend on the new research centre.

The plan came amid growing calls from Chinese industry regulators for Sino-foreign car ventures to raise their local development capability, instead of being cheap assemblers of foreign-branded cars.

Many other foreign carmakers' joint ventures in China, such as those of Volkswagen, PSA Peugeot Citroen and Nissan, have already built their own research or technical centres and have vowed to boost local development capability.

Guangzhou Honda aims to sell 310,000 vehicles next year, up from 260,000 units estimated this year, said Fu Shoujie, executive vice-president of the venture. Sales in 2006, climbing 13 per cent from last year, include 123,000 Accord mid-sized sedans, 57,000 Fit subcompact cars, 43,000 City compact sedans and 36,000 Odyssey multi-purpose vehicles.

The venture now has an annual production capacity of 360,000 vehicles with a new plant that was completed in September.

Honda has another car joint venture in Central China's Hubei Province with Dongfeng Motor Corp, one of the nation's top State-owned auto group. The venture, which is making the CR-V sport utility vehicle and the Civic compact sedan, is expected to sell 63,000 vehicles this year, up from last year's 26,000.

The Japanese carmaker also has an export-oriented plant in Guangzhou, which is assembling Jazz subcompact cars for the European market. Honda said its car exports from China will rocket by 126 per cent to 25,000 units this year.

Overall car sales in China are forecast to exceed 4.2 million units this year, up from 1 million units from 2005.

(For more biz stories, please visit Industry Updates)