Honda Motor said on Friday it had formed a 50-50 joint venture with China’s Dongfeng Motor Corp to produce Honda’s CR-V sport utility vehicles in the central Chinese city of Wuhan, Reuters reported.

The new venture, Dongfeng Honda Motor (Wuhan) Co, will begin production in the first half of 2004 after renovating an existing plant at a cost of $44 million and annual output capacity will be 30,000 units, the report said.

The announcement had been expected after an executive at Dongfeng Motor, China’s third-largest car maker, told Reuters last month that a joint-venture pact had been sealed, although Honda had declined to confirm it.

Reuters noted that, among the foreign firms scrambling to snatch a piece of the Chinese car market, Honda has been one of the most successful and profitable, having entered at a relatively low cost, and its only headache so far had been keeping up with heavy demand for its cars with the limited capacity it has.

By next year, the news agency said, Honda’s main car-making venture, Guangzhou Honda, will double its production capacity to 240,000 units.

Reuters noted that Dongfeng and Honda first joined to make automotive parts, and Dongfeng now builds engines for Honda’s hot-selling Accord sedan and Odyssey minivans.

The new joint venture is capitalised at $28 million, and will employ about 600 workers, the report said.