Chery is planning hopes to build a new plant in central China (Henan province) to exploit the fast-growing microbus market, according to local government sources.

Chery President Yin Tongyao recently met in Zhengzhou with Xu Guangchun, secretary of the Henan provincial Party Committee, and agreed to build an auto plant in nearby Kaifeng with an annual production capacity of 200,000 microbuses, 80,000 light-duty trucks and agricultural machines.

Sales of Chinese-made microbuses surged by more than 60 percent year-on-year to 1.08 million units in the first seven months of this year, according to market data.

However, reports in China suggest that Chery’s plan for a new plant could be derailed. The Chinese Government is becoming concerned over the danger of overcapacity and in August said that auto companies are prohibited from building factories in other provinces.

To get around that rule, the Anhui-based company now has to choose a local partner, Chinese media reports say.