Hyundai Motor plans to build its fourth plant in China for about one trillion won ($926.48 million) and start production in 2016, a source said, as the Korean automaker joins rivals in boosting capacity in the world's biggest car market.

The plant would mark a major overseas expansion for the world's fifth-biggest automaker, which has been cautious about adding manufacturing capacity in the past couple of years as it focuses on improving quality.

Group chairman Chung Mong-koo will sign a preliminary deal on Thursday with the government of Chongqing city, where the proposed plant will be located, Hyundai said in a statement. Hyundai already has three plants in Beijing.

The plant will bring the total China capacity of Hyundai and its affiliate Kia Motors to 2.3 million vehicles a year from a projected two million at the end of 2014, Hyundai said.

Funds for the facility will come from Hyundai's China joint venture and it will aim to start production in early 2016, according to the source who has direct knowledge of the matter.

"The plan is subject to approval from China's central government ... Hyundai looks to start construction of the factory this year, and expedite it as the project has been delayed," said the source, who was not authorized to speak publicly about the matter.

Hyundai shares were up 3.2 percent at 240,000 Korean won, beating the wider market's percent rise as of 0057 GMT.

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