Dongfeng Group H1 profit up 5% on gov't stimulus

Shanghai, August 25 (Gasgoo.com) Dongfeng Motor Group Co. said its profit rose 5% in the first half of the year as the Chinese government's stimulus program spurred demand for cars, Bloomberg reported.

Net income of the third-largest automaker in China climbed to 2.6 billion yuan ($381 million), or 30 cents a share, from 2.47 billion yuan, or 28.69 cents, of a year earlier, the company said in a Hong Kong stock exchange statement today. Sales rose 3% to 39 billion yuan from 37.9 billion yuan.

The automaker's passenger vehicle sales rose 23% to 451,000 in the first six months, while commercial-vehicle sales fell 27.5% to 160,000 units. The company recently said its vehicle sales growth slowed to a single-digit rate in July as stricter emission standards curbed truck sales, according to Reuters.

The Chinese government halved the auto sales tax and offered subsidies earlier this year, helping the country avoid the slump in global vehicle sales. The country, whose vehicle sales rose 31% to 5.37 million in the first seven months, is surpassing the U.S. as the world's largest auto market this year.

Dongfeng said last month it and Nissan will spend 5 billion yuan building a plant in southern China's Guangzhou city to meet rising car demand. The factory, to be completed in 2012, will have an annual capacity of 240,000 vehicles.