Japan's Honda Motor confirmed it is finalising plans to build a new passenger vehicle assembly plant in China in partnership with its existing local partner Dongfeng Motor Group, according to reports in Japan citing company executives.

Construction of the new facility, Honda's seventh in the country, is scheduled to be completed by 2019 in the city of Wuhan in Hubei province. It will have an initial production capacity of 120,000 units per year which could be doubled to 240,000 units later in line with local demand.

This is a 20%-plus increase on Honda's current capacity in China of 1.08m units per year, split between two vehicle joint venture partnerships – Dongfeng Honda Automobile and Guangqi Honda Automobile.

The brand is enjoying very strong growth in this market at the moment with sales of locally-made cars rising by 28% to close to 829,000 units in the first nine months of the year – helped by strong demand for the XR-V SUV and the newly launched Civic passenger car.

Honda is expected to sell all the vehicles it can produce in China for this year, or close to 1.08m units. The overall vehicle market there is expected to exceed 26m units this year with demand boosted by tax incentives on small engine cars.