General Motors Corp (GM) recently signed an agreement to invest in a fourth auto plant in China, doubling its car production capacity in the world's fastest growing auto market.

The world's largest automaker said in a statement it bought 25 percent of the 900 million yuan ($109 million) Yantai Bodyshop Corp, longtime partner Shanghai Automotive Industry (Group) Corp took 25 percent and their 50-50 venture, Shanghai GM, had the rest.

The main aim of the acquisition was to quickly boost car production facilities in China, as Shanghai GM was already running at full capacity of 100,000 units a year, General Motors China's chairman and CEO, Philip Murtaugh was quoted as saying.

“If you look forward five or six or seven years, we need a lot more capacity than what we can eke out just by making little tweaks” in Shanghai, Murtaugh said.

“Yantai happens to be a new plant that we can get vehicles in production a whole lot quicker than building a greenfield plant.” He said Yantai Bodyshop had an annual capacity of 100,000 cars.

China's burgeoning market is luring some of the world's top automakers seeking a bright spot amid a global economic slowdown.

Annual car sales in China jumped 55 percent this year to top the one-million mark for the first time, as steady economic growth of about eight percent and the launch of cheaper models put more vehicles within the reach of Chinese families.

GM competitors such as Volkswagen, Honda, Toyota and Nissan have also announced plans to expand aggressively, hoping to sell to China's massive 1.3 billion population.

The $1.5 billion Shanghai GM —which makes Buick sedans and wagons, and the hot-selling Sail small car — is China's third-largest car producer with an 8.6 percent market share, behind two plants owned by Volkswagen.

Shanghai GM reported sales doubling to more than 100,000 vehicles in the first 11 months of 2002, and launched a new car, expected to target the mid-tier market, on December 26.

The venture will free up capacity by moving production of the Sail to Yantai Bodyshop, GM said in a statement.

Murtaugh said he expected to sell about 55,000 Sails this year and while that number would go up next year, the Sail would not likely use up Yantai's full capacity.

“Down the road, we will look at new opportunities to produce vehicles from throughout the GM family here in Yantai,” he said but declined to elaborate.

Based in the coastal city of Yantai, Yantai Bodyshop was set up by the Shandong provincial government in 2001 to assemble cars using engines and components from South Korea's Daewoo Motors.