* To build third China plant, add 300,000 units capacity

* Sees '09 China car sales rising to 500,000 units

* To launch two new models next year

Hyundai Motor Co (005380.KS), South Korea's top automaker, and its China partner will start building their third plant in China early next year as its sales in the fastest growing major auto market may soon outpace existing capacity, an company executive said on Wednesday.

Hyundai Motor, which competes with Toyota Motor (7203.T), Honda Motor (7267.T) and others globally, has been considering a third plant in China, where sales are expected to exceed its initial forecast significantly this year, an executive with Hyundai's local venture said.

We have now decided to go ahead with the new plant in China to meet rapid sales growth here, the executive with Hyundai's China venture told Reuters.

Beijing Hyundai, the South Korean carmaker's tie-up with Beijing Automotive Industry Holding Corp, will start construction of the new plant early next year, adding 300,000 more units of capacity.

The facility, expected to start operation by 2012, will increase the venture's total annual capacity to 900,000 units, said the executive, who asked not to be named because of the sensitivity of the issue.

Hyundai and its China partner have yet to select the site for the plant, which may or may not be based in Beijing where its two existing facilities are located, added the executive.


China is the only bright spot amid a sharper-than-expected global industry downturn that has sent two Detroit automakers into bankruptcy, thanks to a raft of government policy initiatives implemented in the beginning of the year.

Hyundai is among the major beneficiaries of the stimulus measures, which include aggressive cuts in sales tax for small cars and subsidies for buyers in rural areas.

The South Korean car maker recently raised its China sales target for 2009 to 500,000 units from 300,000 units, up sharply from last year's 290,000 units, the executive said.

It plans to launch a new sedan later on Wednesday, equipped with a 1.6 or 2.0 litre engine, and will add two new models to its portfolio, which now consists of the Accent, Elantra and Sonata among others, the executive said.

General Motors [GM.UL] also raised its China vehicle sales target for 2009 last week after reporting a 112.7 percent jump in its August vehicle sales in the country, its second largest market.

Kevin Wale, president and managing director for GM's China operations said he expected a more than 40 percent increase in the U.S. automaker's China sales this year, doubling a forecast he made in July.

(Editing by Jonathan Hopfner)