SAIC Motor may sell over 2 mln vehicles in 2009

SAIC Motor, China's largest automaker, may sell more than 2 million vehicles this year, up sharply from its previous target if the country's economy remains on track, its chairman said on Tuesday.

After experiencing moderate growth in 2008, SAIC's vehicle sales jumped roughly 26 percent to 1.39 million units in the first five months, as Beijing's stimulus policies drew buyers back into showrooms, data from the company showed.

"Our vehicle joint ventures all did well during the period, while average monthly sales of our self-developed cars exceeded 6,000 units," Hu Maoyuan told a shareholders' meeting.

When asked if the automaker can challenge the 2 million mark for the full year, Hu said: "It's possible if there are no major changes in the economy,".

SAIC, a China partner of General Motors and Volkswagen, had set a conservative sales target of 1.8 million units this year, slightly lower than 1.83 million in 2008.

"The target was based on the market situation in the second half of 2008, but we have seen a big improvement thanks to the government's new policies."

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He was referring to a raft of incentives, including aggressive cuts in sales tax for small cars and rebates for buyers in rural areas, which effectively lifted automobile demand since February from an all-time low in 2008.

GM, which filed for bankruptcy protection over a week ago, has posted record monthly sales in China since April, helped by its Wuling brand mini vans and trucks made at its venture with SAIC.

Chen Hong, president of the Chinese automaker, said he was confident that General Motors would be able to navigate through bankruptcy proceedings and emerging leaner and stronger in the foreseeable future.

SAIC saw its net profit plunge 85.8 percent to 656.2 million yuan ($96 million) in 2008 as natural disasters and a slowing economy dented demand for automobiles.

Hu said he expected the company's gross margin to improve this year even though the improvement will not match the growth in vehicle sales. He did not elaborate.

"Most of the volume growth is coming from smaller vehicles with thinner margins, mid-range models have grown very little. That applies to the overall market and to SAIC," Hu said.