BEIJING, June 20 (Reuters) - Mitsubishi Motors Corp plans to double its stake in its China joint venture to produce cars in the fast-growing market, Changfeng executives said on Friday.
The Japanese automaker would make a "sizeable" new investment in the joint venture, Hunan Changfeng Automotive Co, a maker of sport utility vehicles set up in 1996, but the executives declined to say how much.
"We have held talks. Mitsubishi is expected to increase its stake from 20 percent to 40 percent," Jiang Jianguo, head of the Changfeng's securities department, told Reuters.
Changfeng executives said the venture, which aimed to make more than 30,000 "Liebao" sport utility vehicles this year, would make its foray into the larger passenger car market once Mitsubishi boosted investment.
"We plan to roll out two passenger car models," said a second company official from the firm's headquarters in Yongzhou city in the southern province of Hunan.
Foreign car markers have turned to China, where more than one million cars were sold in a year for the first time in 2002, as demand surged in the country but slid in other regions.
But Mitsubishi has eschewed the more aggressive thrusts of rivals Toyota Motor Corp and Nissan Motor Co , preferring so far to limit its operations to 15 to 25 percent stakes in a small number of assembly and engine ventures.
It finally gained a larger foothold in China after signing a deal last year with affiliated Beijing Jeep Corp to turn out the Pajero Sport SUV and expects to begin making Outlander SUVs next year.
Still, Japan's fourth-largest carmaker racked up about 20 billion yen ($168.8 million) in operating profit in 2002 in China and Taiwan, executives said.
Mitsubishi, part-owned by Germany's DaimlerChrysler AG , expects to sell 300,000 vehicles of all types -- including cars -- in China by 2007.
"We are intensively checking out strategic options right now in China, also with regards to our various local partners," said Mitsubishi spokesman Jochen Legewie. "But we have made no decision whatsoever for any concrete capital increase." ($1=8.277 Yuan) ($1=118.48 Yen)