China's major automaker Changan Auto will invest 3 billion yuan ($440 million) to build a mini-vehicle production base in Hefei city of eastern China's Anhui province, Xinhua News reported today, citing the Hefei municipal government.

Changan Auto and Hefei municipality entered into an agreement yesterday on the project. The new production base will start construction later this year and go into operation in 2011, with an estimated annual output of 300,000 vehicles.

Media reported last week that Beijing city government was in talks with Changan Auto about the possibility of the automaker setting up a sedan production base in Beijing with an annual capacity of 300,000 units, for the company to boost its competitiveness in North China.

After its recent acquisition of Hafei Auto and Changhe Auto, Changan Auto Group now has 21 vehicle plants across the country. In addition to the four bases in Chongqing, Hebei, Jiangsu and Jiangxi, the company has added five production facilities in Heilongjiang, Anhui, Shanxi, Guangdong and Shandong.

In its competition with Dongfeng Motor Corp to become China's No. 3 auto-making group (after SAIC and FAW), Changan Auto expects its annual production and sales scale to exceed 2 million vehicles this year.

Anhui province, home to Jianghuai Auto Co. (JAC) and Chery Auto, boasts its strong capacity in auto manufacturing, and Heifei, the provincial capital where JAC is based, hopes to boost the city's auto sector.