BMW Brilliance Automotive Ltd. broke ground on its second plant in Liaoning province, northeastern China Wednesday as it eyes China's fast growing auto market.

The new plant is expected to start operations by 2012 and will have an annual production capacity of 100,000 units in the first phase, which will be doubled in the second phase.

Upon the completion of the project, 60% of BMW AG (BMW, ETR:BMW) cars sold in China will be domestically produced. BMW Brilliance is a joint venture between BMW and domestic carmaker Brilliance China Automotive Holding Ltd. (Brilliance Auto, 1114.HK).

BMW's 3 series extended edition and the X1 SUV will be manufactured at the new plant, while the original plant will continue to produce standard 3 series and 5 series units.

The paper has learned that Brilliance Auto requested to produce BWM's iconic Mini brand at the new facility but was told by the German auto maker that its UK factory is capable of fulfilling demand in the Chinese market.

During the ground breaking ceremony, Chen Zhenggao, governor of Lialing province expressed the government's hopes that BMW will also start making its 7 series cars in China.