Ford Motor Co and its Chinese partner will announce plans on Friday for their third car manufacturing plant in China, where sales may soon outpace its existing capacity, an industry source said on Tuesday.

Ford, which competes with General Motors and others globally, produces the Focus, Mondeo and other sedan models in China in a tie-up with Chongqing Changan Automobile Co <000625.SZ> and Japan's Mazda Motor <7261.T>.

The new plant, to be based in the southwestern Chinese city of Chongqing, will have annual production capacity of at least 150,000 units per year, the source told Reuters, adding to Ford's current car manufacturing capacity in China of 447,000 units.

There will be a ground-breaking ceremony on Friday and Ford's global chief Alan Mulally will be there, said the source asked not to identified as plans for the new manufacturing facility has not been publicly announced.

Financial details and further information regarding the new plant were not available.

Representatives at Ford Motor in China and the company's joint venture declined to comment.

The Dearborn, Michigan-based automaker also holds 30 percent of Jiangling Motors Corp <000550.SZ>, which makes light trucks and vans, including Ford's Transit model.

RECORD CHINA SALES

China, which overtook the United States as the world's largest auto market in January, has been a leading bright spot in the struggling global auto industry as Beijing's stimulus package bolstered consumer confidence.

Many car makers, from GM to Hyundai Motor Co <005380.KS> are building greenfield plants or teaming up with new partners to ride on the wave of explosive sales growth since April.

Ford, the only Detroit auto giant not to reorganize through bankruptcy in 2009 with U.S. government support, is a relative latecomer in China, where GM and Volkwagen AG lead.

However, Ford is also among the major beneficiaries of government policy incentives implemented at the beginning of the year, which include aggressive cuts in sales tax for small cars and subsidies for buyers in rural areas.

Changan Ford Mazda sold a record 21,127 Ford brand models in August, up 111 percent from a year earlier. Sales of Ford Focus, one of the top sellers in the mid-size car segment in the country, rose 58 percent to 12,269 units in August, with sales of the all-new compact Ford Fiesta, which hit the market in March, coming to 4,539 units, according to company data.

Ford has not issued a forecast for its 2009 China sales, but Nigel Harris, head of sales and marketing for its China operations, told Reuters earlier this year the automaker expects to outpace the growth of the industry, which is estimated to expand at well over 20 percent this year.

In 2008, Ford sold a total of 306,306 vehicles in China.

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