China FAW Group Corp. has postponed the construction of a joint venture assembly plant in Mexico with its local partner Salinas Group, according to a FAW source.

"Given the serious economic recession in Mexico, it is impossible to proceed with the project in line with the original schedule," says Li Hao, a manager of Tianjin FAW Imports and Exports Co., which is a FAW subsidiary overseeing the company's exports to Mexico.

Under the agreement FAW and Salinas signed in late 2007, construction of the plant was to begin in the southern Mexican state of Michoacán in 2009.

With a total investment of $100 million, the plant was slated to start producing FAW-badged small cars by 2010 with an annual capacity of 100,000 cars.

In spite of the delay, Li says the plan to build the plant is still on.

"We are not writing it off but revising it. Some details will likely change," he says.

Li declined to comment on likely changes to the plan.

For the time being, FAW will concentrate on exporting its small cars to Mexico, Li says.

So far this year, FAW has shipped 1,500 Xiali and Vita small cars to Mexico in two batches.

In 2008, FAW exported around 5,000 units of the two small cars to Mexico. Says Li; "Our target this year is to maintain last year's level of exports to Mexico."