Chinese automakers had record profits last year as rising incomes boosted buyer interest in the world's fastest-growing car market, underscoring the lure for General Motors Corp and other foreign manufacturers.
Earnings rose almost two-thirds to 43.1 billion yuan (US$5.2 billion) as sales jumped 31 percent, the State Development Planning Commission said. Sales will probably rise by a quarter this year from last year's 647 billion yuan, official figures show.
"Sales surged because of pent-up demand for vehicles at Chinese households," said Yale Zhang, an analyst at Automotive Resources Asia Ltd. in Beijing. "People hoping to buy imported cars switched to buying local models when they realized tariffs weren't dropping as expected and that cars took too long to import."
General Motors, Ford Motor Co, Toyota Motor Corp and most of the world's biggest vehicle makers have formed China ventures to meet rising demand. Ford will start making Fiesta sedans this weekend at a venture with Changan Automobile Co in the central Chinese city of Chongqing. It wants to make as many as 50,000 of the four-cylinder cars a year, a Ford official said.
Next week, Mazda Motor Co, of which Ford owns a one-third stake, will begin making its 2.3-liter M6 passenger cars in Changchun, in northeastern China, said Ma Fuwen, an official at Mazda's Chinese partner, First Automotive Works Corp.
The gains are bolstering local manufacturers such as First Automotive, the country's biggest vehicle maker. Total Chinese car sales will probably rise 24 percent this year to 1.45 million units, according to the State Information Center, a government think tank.
Sales of all vehicles, including cars, rose to 3.2 million vehicles last year, the planning commission reported yesterday on its Web site. Production rose 38 percent to 3.3 million units.
Rising incomes are helping power gains. In Shanghai per capita income rose about 7 percent last year to US$4,500. Across the country, household savings rose 17.8 percent in December from the same period in 2001 to a record 8.7 trillion yuan.
DaimlerChrysler AG, which makes sports utility vehicles in Beijing, is in talks with its Chinese partners to assemble Mercedes Benz C-Class and E-Class sedans in the country, selling them to households and businesses which are becoming increasingly affluent. The company will continue to import its S-Class sedans in China, DaimlerChrysler's strategy head Ruediger Grube said.
General Motors has formed four manufacturing ventures in China, making passenger cars, sports utility vehicles and vans.
Volkswagen AG, which owns the biggest market share among foreign brands in China, has separate ventures with two of the nation's biggest manufacturers. Its venture with First Automotive Works in northeastern China makes Audi A6, and Volkswagen Jetta and Bora models. A second, and competing venture, with Shanghai Automotive Industry Corp makes the Volkswagen Santana, Passat and Polo cars.
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