Govt stimuli bring Dongfeng Motor bonanza

Visitors walk past Dongfeng Motor Group's booth at the Beijing Auto Show earlier this year. The country's third largest automaker reported Friday its first-half net profit more than doubled from a year earlier. Tomohiro Ohsumi / Bloomberg News

Dongfeng Motor Group Co, the third-largest automaker by sales volume in the country, said its first-half net profit more than doubled from a year ago thanks to strong demand amid government stimulus measures to boost consumption.

Net profit for the six months ended June rose to 6.35 billion yuan from 2.56 billion yuan during the same period last year, 155 percent up, the company said in a statement to the Hong Kong stock exchange Friday.

Govt stimuli bring Dongfeng Motor bonanza

The group's total revenue was 61.9 billion yuan, up 59 percent from 39 billion yuan last year.

Dongfeng continually boosted its sales in the first half after the Central Government reduced consumption taxes for small-engine cars and offered subsidies to rural buyers.

The group manufactured 970,000 vehicles and sold 972,000 during the period, an increase of 65.6 percent and 59.2 percent respectively from a year ago, the company said in the statement accompanying its interim results.

Some 8.9 million were manufactured and 9 million vehicles were sold by domestic automobile manufacturers in the first half, up 48.8 percent and 47.7 percent respectively over the same time last year, according to the automaker.

Dongfeng enjoyed a market share of approximately 10.8 percent in terms of sales volume, the automaker said, which increased by 0.8 percentage points over the same period last year.

"The second half of 2010 will face various uncertainties at the macro-economy level and the automobile industry tends to grow at normal speed, but the seasonal fluctuation will aggravate," said Chairman Xu Ping. He added that strong economic growth and the rising consumption capacity of local people will support sustainable growth in the automobile industry.

The government's new subsidy policies for energy-efficient and new-energy vehicles will further stimulate consumption demand, Xu added. He said that the tier-2 and tier-3 automobile market will grow fast and provide great opportunities for the industry.

Dongfeng Motor joined another 15 state-owned enterprises in forming an alliance to develop technology and products for electric vehicles last week. The alliance aims to pool resources to promote the development of new-energy automobiles on the mainland.

Earlier, Dongfeng won regulatory approval for its plan to form a joint venture with Taiwan's largest automaker Yulon Motor Co. The venture will have an annual capacity of 120,000 vehicles.