Chinese auto parts maker Dragon Hill Wuling Automobile Holdings Ltd plans to spend 600 million yuan ($88 million) to boost production capacity of its specialised vehicles such as small electric cars and mini vans.

The company, which generates most of its profit from trading and making parts for mini-vehicles, also plans to make acquisitions in China to expand its car-making business, the company's vice chairman He Shiji said on Thursday.

Dragon Hill Wuling, controlled by state-backed Wuling Group, plans to increase the production capacity of its specialized vehicles to 100,000 units by 2011 from 30,000.

The company, which plans to sell its small electric car in the United States next year, expects the specialized vehicle business to generate up to 30 percent of the company's revenue over the period, up from about 10 percent in 2008. It reported 7.1 billion yuan in revenue in 2008.

"The specialized vehicle business contributes a small portion of the revenue, but it has shown to have the largest growth potential," He told Reuters.

Dragon Hill Wuling said it is in preliminary talks to supply China's First Automobile Works parts for its mini-vehicle production.

The company, which mostly makes the parts for affiliate company SAIC GM Wuling Automobile Co, is also in talks with a number of other car makers planning to venture into mini-vehicle production.

He said an increasing number of companies want to move into the segment, encouraged by government tax cuts and rebates on small car purchases.