Ford is to build a third factory in China, according to news agency reports.

According to Reuters, Ford Motor Co. chief operating officer Jim Padilla was quoted as saying on Thursday by a spokesman at partner Mazda Motor Corp. that the new plant will have initial output capacity of 200,000 units a year.

Ford and Chinese partner Chongqing Changan Automobile Co. Ltd. held a ceremony in the eastern Chinese city of Nanjing on Thursday to sign an investment agreement to buy land for the new factory, Reuters added.

In an earlier report, The Associated Press noted that Ford and Changan Automobile Group plan to expand investment in their 50:50 joint venture by up to $US1.5 billion over the next few years and the new auto plant is part of that expansion.

Ford China spokesman Kenneth Hsu reportedly would not comment on Japanese news reports that Mazda Motor Corp. [33.4% Ford-owned] will take a 12.5% stake in Changan Ford, though Mazda representatives were expected at the signing ceremony.

Mazda has been discussing a business plan for the Chinese market with Ford, AP added.

The Associated Press noted that Ford’s global rivals are also building up their China operations, despite recent signs that auto sales are slowing – Volkswagen plans to invest up to €5.3 billion in China by 2008 and General Motors has announced a $US3 billion, three-year investment plan.

AP said that Ford currently builds Mondeo and Fiesta sedans at Ford Changan’s plant in Chongqing, a sprawling municipality in western China, and also builds Transit light trucks in Jiangxi province with Jiangling Motors Co., a Chinese light truck and van maker in which it has a 30% stake.

According to AP, a report last month in the Japanese financial newspaper Nihon Keizai Shimbun said the Nanjing project would include a passenger car plant, with an annual capacity of 200,000 units, and an engine factory, with annual output of up to 500,000 units.

The factory would begin operation in 2006, the report said, according to the Associated Press.