China's Zhongxing Auto delays $300 mln Mexico plant

SHANGHAI, July 23 (Reuters) - China’s Hebei Zhongxing Automobile Co has put on hold its plan to build a $300 million plant in Mexico near the U.S. border as it seeks a new partner for the operation, a company executive said on Wednesday.

He said the company, a mid-sized Chinese automaker, had terminated its partnership with Chamco Auto, a U.S.-based vehicle importer, earlier this year, although he declined to discuss details of the matter.

“We are still looking for a new partner,” said the executive, who asked not to be identified.

Zhongxing Automobile had planned to start making sport utility vehicles and pickups next year at the Tijuana, Mexico, assembly plant, which will have annual production capacity of 150,000 units.

Plans called for exporting 25 percent of the Tijuana-assembled vehicles to the United States, Chamco said in June of last year.

In a message posted on Chamco Auto’s website and dated July 17, 2008, the company’s chairman Bill Pollack said a letter of termination from Zhongxing Auto had failed to meet contractual requirements and was invalid.

But the Zhongxing executive said his company had postponed its Mexico production plans and would not start construction of the facility until it secured a replacement for Chamco.

Zhongxing Auto, based in northern China’s Hebei province, is now talking with several potential partners, he said, although he declined to name them.

The assembly of Zhongxing vehicles in Tijuana would allow them to be exported to the United States duty free, under North American free trade rules.

Mexico is already a major auto producer, with assembly plants for Nissan Motor Co 7201.T, Ford Motor F.N, Volkswagen AG VOWG.DE and other big industry names.

Zhongxing is one of several Chinese automakers, including the largest, SAIC Motor Corp 600104.SS, hoping to emulate the global success of their Japanese and Korean rivals.

SAIC, owner of the MG brand, plans to resume making MG TF sports cars in Britain in August and will begin selling them in the UK via more than 40 dealers later this year, its president Chen Hong said in June. (Reporting by Fang Yan; Editing by Edmund Klamann)