SAIC Motor Q3 net profit up 9 fold, outlook positive

China's SAIC Motor Corp, the No. 1 automaker in the world's largest auto market, said on Friday third-quarter net profit jumped ninefold as tax breaks and subsidies spurred a jump in vehicle sales.

SAIC, which runs vehicle manufacturing ventures with General Motors [GM.UL] and Volkswagen (VOWG.DE), has been a major beneficiary of Beijing's policy support, including tax incentives for small cars and subsidies for buyers in rural areas, part of a package designed to stimulate the world's third-largest economy.

Analysts are upbeat about the outlook for SAIC for the full year and beyond, given robust auto demand and a low comparative base in 2008, when the automaker was bogged down by big write-offs for its loss-making South Korean subsidiary, Ssangyong Motor (003620.KS).

SAIC earned 2.53 billion yuan ($370.6 million) during the July-September quarter, beating an average forecast of 2.16 billion yuan from 4 analysts polled by Reuters and versus 260.8 million yuan a year ago.

From January to September, it booked 3.97 billion yuan in net profit, up from 2.23 billion yuan a year earlier, it said.

Turnover rose 21.5 percent to 99.61 billion yuan in the first nine months, or roughly 84 percent of its full-year goal of 119.4 billion yuan.

The Shanghai-based automaker attributed the strong earnings to government incentive which helped the country's auto market bounce out of its lows.

SAIC's vehicle sales jumped 47.27 percent from a year earlier to 1.95 million in the first nine months, topping the 1.83 million units sold for all of 2008, according to company data.

Sales of its own-brand vehicles jumped 186 percent to more than 65,000 units in the first nine month, it said.

SAIC is the top automaker by sales in China, which has more than 100 companies fighting for a piece of the market which overtook the United States as the world's largest at the start of this year.

The pace of sales may slow in 2010 as incentive policies expire at the end of this year, but demand in smaller, inland cities could still help lift its topline, analysts said.

Nick Reilly, president for GM's International Operation, told reporters earlier this week he expected China's car market to grow more than 10 percent next year even without government support. [ID:nSEO350079]

Shares in SAIC rose 3.89 percent on Friday ahead of the results. They have risen 32 percent this year, outperforming the Shanghai Composite Index .SSEC, which lost 6.1 percent.