Hyundai Motor Co. is considering building an assembly plant in Chongqing -- which would be its fourth Chinese factory -- to keep pace with China's fast-growing auto market.

Hyundai Chairman Chung Mong-koo was expected to sign an agreement Thursday with the Chongqing government to study constructing a plant there, Hyundai wrote in an e-mailed statement.

The city is the most likely site for the factory, the South Korean company said.Hyundai faces rising competition in China, its largest market, as sales at Toyota Motor Corp. and Nissan Motor Corp. have recovered from anti-Japanese boycotts touched off in 2012 by a territorial dispute.

"To increase or at least keep its market share, the decision to build a new plant would have been inevitable for the company," said Lee Sang-hyun, an analyst at NH Investment & Securities Co. "Although the China auto market's growth has slowed compared with a few years ago, it is still a rapidly growing market."

The carmaker's annual sales in China surpassed 1 million vehicles last year for the first time, according to data compiled by Bloomberg. It sold 640,698 units in South Korea and 720,783 vehicles in the United States.

The fourth plant would have capacity of 300,000 cars a year, raising Hyundai's output to 1.5 million vehicles, according to the statement.

This year, the company forecasts its sales in China will total 1.1 million vehicles, including trucks, helped by China-specific models including the Mistra sedan and the completion of its commercial-vehicle manufacturing plant in Sichuan, CFO Lee Won-hee said in January.

The company expects China's overall auto demand to reach 20.1 million units by 2016, according to the statement. Hyundai needs to increase output in the country to keep pace with rivals, the company said.

Hyundai began production in China in late 2002 and makes 10 models in the country, including the Langdong sedan and the Santa Fe crossover, the company wrote in an e-mailed response to Bloomberg query. It isn't exporting any cars from China.

Hyundai's three Chinese car plants are in Beijing. Its commercial-vehicle business has a plant under construction in Sichuan, with capacity to build 150,000 vehicles a year. That facility is scheduled to begin production in the first half of this year, the company said in the statement.

Source: China Automotive Information Net