Production of cars, trucks and buses reached 781,340 units, up 59.5 percent from May 2011 and the eighth consecutive monthly increase, according to the Japan Automobile Manufacturers Association (JAMA).

The figures reflect a low basis of comparison from 2011.

Japan's auto sector suffered one of its worst months on record in May last year when they slashed production and shuttered plants due to power shortages and a parts supply crunch following the March natural disasters.

Flooding in Thailand later in the year added to the pain as Japanese manufacturers with plants in the country saw major supply disruption.

Most automakers returned production to pre-quake levels by the end of 2011.

The yen also hit record highs against the dollar last year and remains strong, making exporters' goods pricier overseas while shrinking the relative value of their overseas earnings.

The company said the new plant in the northeastern city of Yancheng would produce 300,000 cars annually when completed in the first half of 2014. It would help Kia boost its annual production in China to 730,000 units.

Kia, an affiliate of South Korea's leading automaker Hyundai Motor, sold 432,518 vehicles in China last year and plans to sell 460,000 this year.

"This third plant in China will be an opportunity for us to make further progress on the quality front as well as increase overall customer satisfaction," Hyundai Motor chief Chung Mong-Koo said in a statement.

Hyundai and Kia together form the world's fifth-largest car-making group by sales. Kia operates 13 plants in eight countries including India and the United States.