Changan Auto, Ford's main partner in China, has won approval to raise 1.1 billion yuan ($US132.9 million) in an additional share issue to fund production expansion, the company reportedly said on Wednesday.

Chongqing Changan Automobile Co. Ltd., which also makes compact cars with Suzuki Corp., said in March it wanted to issue up to 150 million yuan-denominated A shares domestically - eschewing an overseas listing popular among local firms at the time, Reuters reported.

Its stock would be issued from August 18 to 26, expanding Changan's share base by 10% to 1.62 billion. Pricing would be announced after a public subscription, it said.

The money raised would be used to build a new assembly line to add 100,000 mini-vans annually to the company's output capacity, and to expand manufacturing to other parts of the country, the company said on Wednesday, according to the news agency.

Ford and Changan Auto intend to team up with Mazda on a planned car factory in the prosperous eastern city of Nanjing, with initial capacity for around 200,000 cars.

Changan Auto - China's largest minivan-maker - reportedly posted a 7.3% fall in second-quarter earnings as car sales slid.

Analysts told the news agency full-year earnings may grow 10% - less than a previously expected 20% - as a price war begins to bite - General Motors and Volkswagen have already embarked on a round of price cuts to stimulate sales in the face of a market slowdown.

Reuters noted that Changan Auto's Shenzhen-listed hard currency A shares have fallen 40% since early April, when the government embarked on its credit-tightening campaign, vastly underperforming the market's 23% fall over the same period.