The logo of Hyundai Motor is seen on a car displayed at a Hyundai dealership in Seoul July 26, 2012.
Hyundai will remodel a car manufacturing plant that previously belonged to a Chinese partner, a move expected to help pave the way for the automaker to build a separate factory in western China.
The South Korean company, which only has factories in eastern China, has said it intends to build a plant in China's southwestern city of Chongqing.
The factory would help it reach customers in western parts of the country, according to Reuters.
"Local demand is increasing and our rivals upped their production. If we fail to increase our production, there is a consensus that the current market share of 8.8 may be threatened," a Hyundai official said to The Korea Times.
Hyundai has yet to obtain approval from China's central government, with South Korean media claiming that it is under pressure to build a plant in the northeastern province of Hebei.
The automaker now plants to remodel a Beijing plant owned by its Chinese partner, Beijing Automotive Industry Holding Co., in addition to pursuing its plan with its partner for a factory in Chongqing.
"We need to build another Chinese plant to maintain our current market share, at a time when our rivals Volkswagen and General Motors have expanded their facilities," the official said.
Both plants are set to be completed sometime by 2016.
Hyundai's annual production capacity in China is 1 million vehicles. The two plants would allow the company to turn out 500,000 to 600,000 more cars.
"That could be beneficial in the long term, but could raise management risk in the short term," the Hyundai Motor official said.
Volkswagen recently received approval from Beijing to establish two more plants.
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