FAW Car to invest 4.34b yuan to build new energy automobile factory

Gasgoo.com (Shanghai August 9) - Own brand manufacturer FAW Car announced that it will be investing 4.34 billion yuan ($687.97m) to construct a factory dedicated to building new energy vehicles, China Business News reported today.

According to the announcement, the new site will contain stamping, welding, painting and general assembly halls, as well as auxiliary infrastructure. The site will help boost FAW Car's annual production capacity by 200,000 vehicles. Construction is scheduled to take about two years. It is estimated that FAW Car will make a return on the investment in a little over seven years.

FAW Car believes that the project will help extend the manufacturer's overall supply chain, while helping it to cover new markets. In the announcement, the FAW Car stated that mass production of new energy vehicles requires that the manufacturer first prepare the necessary infrastructure, adding that expanding its market coverage will help improve its brand image.

According to its performance review released last month, FAW Car revealed that it suffered a deficit of 45 million yuan to 75 million yuan ($7.13m-$11.88m) over the first two quarters of the year. By comparison, the manufacturer reported a net profit of 800 million yuan ($123.64m) in the first half of 2011. FAW Car attributes the drop in profits to falling sales, declining profit margins and increasing costs.