Dongfeng Motor to increase capex to expand capacity

Dongfeng Motor Group Co<0489>, the Hong Kong-listed unit of China's third-largest auto maker, Dongfeng Motor Corp, said on Wednesday that it plans to increase its capital expenditure in 2010 to RMB 9 billion, as it aims to expand production capacity due to strong demand in the domestic market, Dow Jones Newswires reported.

Dongfeng Motor plans to spend RMB 21 billion in total over the next two years, said Chairman Xu Ping. Last year, the company's capital expenditure was RMB 6.3 billion.

The company's target output is 1.7 vehicles this year, up from 1.42 million units last year. Its sales target is 1.73 million units this year, up 21% from 1.43 million units last year.

Dongfeng will outperform the market and continue to gain market share, Xu said, adding that the company eyes an 11% share of the world's largest auto market.

China's auto sector will continue to grow at a relatively rapid pace in 2010, and sales will likely hit 15 million units, Xu said.

Dongfeng is the Chinese partner of Honda Motor Co, Nissan Motor Co and Peugeot SA. Its net profit in 2009 jumped 58% year on year from RMB 3.96 billion to RMB 6.26 billion because of strong vehicle sales.

Dongfeng's vehicle sales rose 44% year on year to 1.9 million units last year, boosted by the Chinese government's stimulus policies, China Knowledge reported earlier.