FAW Car to invest $345 mln in own-brand cars

FAW Car 000800.SZ, a unit of Chinese automaker FAW Group Corp, said on Monday it planned to invest 2.36 billion yuan ($345 million) to bolster its internally developed car brands.

The investment will add 200,000 units of annual capacity for its own-brand cars by 2012, it said in a statement.

Annual capacity for its own-brand cars is currently 120,000 units, a company executive said.

FAW Car, maker of Red Flag cars once favoured by top Chinese Communist Party leaders, did not say how it would fund the project.

It warned that the investment carried risks due to worsening economic conditions but said it would improve the company's competitive position in the long term.

After years of breakneck growth, car sales growth in China, the world's second-largest auto market, began to taper off in the first half of this year as a slowing economy, rising fuel prices and a series of natural disasters, including a devastating earthquake in the southwest, curbed consumer demand.

Monthly car sales posted a rare decline in August and September.

FAW Car's parent, FAW Group, a local partner of Volkswagen and Toyota Motor, said in July 2007 it would invest a total of 13 billion yuan in the next eight years to develop vehicles carrying its own brand.

FAW Car also said on Monday that its net profit fell 4 percent in the third quarter due partly to 93.25 million yuan in provisions for possible inventory losses in the first ninth months of the year.

The company's shares fell 2 percent to 5.42 percent in morning trade, outperforming a 3.6 percent fall in China's benchmark Shanghai Composite Index.