BEIJING, Dec. 14 -- Chang'an Automobile Corp, the fourth-largest automaker in China, said it would set up a manufacturing joint venture in Malaysia next year to assemble its self-designed cars.

    The Chongqing-based company, which specializes in making mini cars and sports utility vehicles, will cooperate with a Malaysian consortium to make its CM8 mini car model. Chang'an will also grant the Malaysian firm permission to use its brand.

    Foreign automakers are barred from selling cars, assembled in Malaysia, in its market and can only export them to other countries under a new policy which protects the local car industry.

    "We are able to sell the CM8 model in Malaysia because there are loopholes in practice and we would set up a special distribution channel which would not breach the law," said Zhu Huarong, vice president of Chang'an Group, without divulging further details.

    Chang'an Auto, which has ventures with Mazda, Ford and Suzuki, exported more than 14,000 cars by the end of November, to rank first among all automakers nationwide. It mainly targets Southeast Asia, Middle East and Africa.

    "Our exports are still focused on developing countries. However, we will seek more opportunities in Europe in the following years. The first step (in the export drive) will start with the 2006 Geneva Auto Show with four new models," Zhu revealed.

    Meanwhile, the company said it would continue its aggressive development strategy both in exports and manufacturing capacity amid the threat of overcapacity in the auto industry and declining profit.

    The automaker aims to sell 20 percent of all its cars overseas by the end of 2015 after sales revved up 30 percent annually and hit 580,000 cars in 2004 since its setup.

    Its production capacity is expected to double to 1 million units through three plants before 2008 after they complete several assembly lines of Chang'an Mazda and Chang'an Ford.

    Zhu believed the expansion in capacity production will actually benefit all customers in China through competition and the Chinese auto market would not develop properly without competition.

    "However, we eye the great potential in specific segmentation such as mini cars, which will not only boost our sales but also will drive profit," Zhu further added.

    (Source: Shanghai Daily)