Changan Automobile Group, one of the leading auto manufacturers in China, plans to set up a joint venture plant with a Mexican company to produce compact and mid-sized cars in the South American country, sources reported.

According to Luo Minggang, vice president of the group's listed arm Changan Automobile Co Ltd, the company has signed an agreement with the local partner and the new venture is expected to start operation at the end of 2009 or early 2010, with an initial capacity of 50,000 cars.

However, no more information was given about the Mexican partner.

Luo also noted that Changan may extend its reach to the U.S. and European markets by taking advantage of the geographic location of the new JV.

In the first half of this year, Changan exported 16,000 cars mainly to Malaysia, Vietnam, Iran and Egypt, etc.

The company expects its annual sales volume to hit 2 million units by 2010, 60% of which will be self-owned brand.