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Chang'an Motor Corp, the Chinese partner of Ford Motor and Suzuki Motor, said it will enter the increasingly popular hybrid sector in the world's No 3 vehicle market by offering its own-brand petrol-electric cars.

 

The nation's fourth-biggest auto group based in Chongqing Municipality told China Daily that it plans to embark on commercial production of hybrid cars in 2008.

 

The company expects hybrid cars will contribute 10 percent of its own-brand sales annually by 2010, it said.

 

Hybrid cars twin a conventional engine with an electric motor to improve fuel efficiency and mileage.

 

Chang'an said it will spend 250 million yuan (US$31 million) on hybrid cars as part of its total investment of more than 5 billion yuan (US$620 million) to develop own-brand cars in the years to 2010.

 

It began petrol-electric car development in the late 1990s.

 

The group said hybrid cars would also be available for its overseas expansion.

 

It announced last month that it aims to lift overall sales from 630,000 vehicles in 2005 to 1.5 million units by the end of the decade, with more than half from its own nameplates. It said it hoped overseas sales would account for 25 to 30 percent of own-brand sales by then.

 

The group's hybrid car push comes after a slew of foreign auto giants and other domestic producers began, or announced they would start, making petrol-electric cars in China, where oil is in short supply and fuel prices are growing rapidly.

 

Japan's Toyota Motor began production of its 1.5-litre Prius hybrid sedan at the end of 2005 with another Chinese auto group, First Automotive Works Corp. The move made the world's No 2 carmaker the first producing hybrid vehicles in China.

 

Maple, the Shanghai-based unit of China's biggest privately owned carmaker Geely Automobile, also plans to enter the hybrid car sector in 2008 with an initial output of 5,000 to 10,000 units a year.

 

However, analysts said there are many obstacles in China to the growth of hybrid cars, despite huge potential in the long term due to their capacity to save fuel.

 

The biggest hurdle is that hybrid engines are still much more expensive, which drives up the cost of petrol-electric cars.

 

(China Daily July 11, 2006)