December 17, 2010 / 6:09 AM / 9 years ago

UPDATE 1-Honda targets China sales of 730,000 units in 2011

* Honda estimates its China sales around 650,000 this year

* JV brand Linian key to Honda’s China growth -China chief

* Need monthly output of 2,000 hybrids to produce in China

* Open to buying hybrid batteries from Chinese makers (Adds details throughout)

TOKYO, Dec 17 (Reuters) - Honda Motor Co (7267.T) said on Friday it would target sales in China of 730,000 vehicles in 2011, for growth of more than 10 percent from the 650,000 estimated for this year.

“We expect the overall (Chinese) market to grow by an average 10 percent,” Seiji Kuraishi, head of Honda’s China operations, told reporters in Tokyo. “We will aim for a growth of more than 10 percent, of around 730,000 units.”

Honda operates 50-50 joint ventures with Guangzhou Automobile Group Co (2238.HK) and Dongfeng Motor Group (0489.HK), as well as a majority-owned factory building the Fit/Jazz subcompact model for exports to Europe.

Honda’s production capacity in China is set to rise to 890,000 cars a year in 2013 as it strives to keep up with demand.

Kuraishi said that while Beijing was moving towards fiscal tightening and discontinuing tax incentives on smaller cars next year, growth will be rapid in inland regions, which are replacing coastal cities as the major driver of car sales.

To achieve fast growth in those markets, Kuraishi said one key would be the debut next year of the proprietary brand of Honda’s joint venture with Guangzhou, called Guangqi Honda. The first car under the brand, called Everus, or Linian in Chinese, will debut at the Guangzhou auto show next week.

“The Linian brand will be key to attract younger and entry-level customers where the Honda brand couldn’t quite reach,” Kuraishi said.

“I have very big expectations for the brand,” he said, declining to disclose a sales target or specific product plans.

Honda, like most other global automakers, is beefing up its portfolio of market-specific products in emerging markets such as Thailand and India to boost sales.

On the other hand, while gasoline-electric hybrid cars have yet to gain ground in China, Honda will aim to build the fuel-efficient cars locally as soon as possible, with or without sales subsidies from the government, Kuraishi said.

He said Honda had no specific timetable, but added that it would need minimum monthly production of about 2,000 vehicles to make local hybrid production viable. Last year, Honda sold only about 300 imported Civic hybrids in China.

“For (local production), lowering the cost and product price will be important, which means we would have to localise the core components such as the batteries and motor,” he said.

Kuraishi added that Honda would want a wholly owned subsidiary to produce the electric motors, developed in-house, in China without a local partner to prevent an outflow of the advanced technology.

But Honda would be open to procuring batteries from any maker, including Chinese ones, as long as they met the car maker’s quality standards, he said. (Reporting by Chang-Ran Kim; Editing by Michael Watson)

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