Fuji Heavy Industries has agreed in principle to make Subaru vehicles in northeast China with Chery Automobile, the country's largest independent automaker, two sources told a news agency.

"Chery and Fuji have agreed on the major terms and conditions of making Subaru in the city of Dalian and are now communicating with Chinese regulators to seek their endorsement," one person briefed on the matter told Reuters.

The terms and conditions were similar with what had been previously reported, the person added.

The Nikkei business daily reported late in 2010 that the two companies were in advanced talks to build a JPY30bn (US$366m) Chinese plant, with initial annual capacity of 50,000 units, rising to 150,000.

Another person close to the companies told Reuters that Fuji Heavy was still occupied with recovery efforts after the 11 March earthquake and tsunami, contributing to a postponement of the announcement of its China tie.

A Fuji Heavy spokesman told the news agency the company had no further comment after admitting late last year that Chery was among its potential partners in China. Chery spokesman Jin Yibo said he had no information.

Chery eyes 30% export boost