Honda Stock Slides Despite News - TheStreet



) --


(HMC) - Get Report

stock has taken a dive even after the company revealed a new car for the Chinese market and its plans to build a new plant to meet growing Chinese demand.

Dongfeng Honda Automobile

, an auto production and sales joint venture of Honda in China, announced plans Wednesday to build a second auto production plant to meet continued growing demand in the Chinese market.

To build the new plant, the company is planning to acquire one million square meters of land about four kilometers northeast of the existing plant. The first plant is based in the Economic and Technological Development Area of Wuhan, Hebei Province.

The second plant is slated to begin operating in the second half of 2012. It will have an annual production capacity of 60,000 units. The initial investment for the plant will be about CNY1.2 billion, or about $168.2 million.

When Dongfeng Honda's second plant begins production, Honda's overall annual auto production capacity in China will reach 710,000 units, the company said in a statement.

The plant will be the first Honda production plant to generate a portion of its electricity from solar panels -- a move expected to reduce CO2 emissions by about 500 tons a year.

China surpassed the U.S. as the world's largest auto-market last year and Honda is determined to capitalized on this trend. The company, for example, has generally avoided smaller, cheaper cars. But given that these types of cars are in high demand in China, Honda is giving them a try.

Honda has revealed to


plans to bring its cheapest car in China to the mass market next year. The car is being developed by Honda and local partner

Guangzhou Automobile

, according to


The "Li Nian" vehicle's engine will be smaller than 1.6 liters.

Meanwhile, Honda stock has tumbled by 3.9% to $35.20 as fears of government efforts to cool down the Chinese economy spreads.

Other auto stocks are also heading lower.


(TM) - Get Report

stock has lost 3.1% at $89, and


(F) - Get Report

shares have slid 1.4% to $11.60.


( DAI) is down 4.5% at $50.20.

-- Reported by Andrea Tse in New York

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