Mitsubishi Motors (MMC) is planning a new plant in China to supply engines for locally built Outlander sport utility vehicles.

At present, the carmaker imports engines for the SUVs from Japan. The plant will have an annual production capacity of some 150,000 units, a Reuters report suggests.

GAC Mitsubishi Motors, a joint venture with Guangzhou Automobile Group, will build the plant in China's southern Hunan Province, with construction expected to start by the end of this year and engines to begin rolling off the line by December 2018.

The company has so far obtained nearly all the engines used in the Chinese-assembled SUVs from Japan. The new plant will allow the engines to be supplied locally, enabling MMC to compete more effectively with Japanese rivals such as Toyota, Nissan  and Honda, which all make engines in China.

Mitsubishi is struggling with the impact of a fuel testing scandal in Japan, and also facing management upheaval now that it is under the control of Nissan. As part of the Renault Nissan Alliance, its manufacturing operations are sure to come under the critical eye of Carlos Ghosn.