China's No.1 subcompact car maker to pursue new strategy

Shanghai. October 15 (Gasgoo.com)-Tianjin FAW Xiali Automobile Co., China's No.1 subcompact-car manufacturer is considering a new strategy to make bigger cars and spend more on R&D, China Business Post reported.

 

"The company has stepped up efforts to develop new products and plans to offer at least 9 new models by 2010. And by the company's output capability will reach 400,000 units," said Wang Gang, General Manager of FAW Xiali.

 

Revamped hatchback and sedan versions of the Weizhi model, a relatively higher-end model among the company's current portfolio will hit the market in late 2008. “The company is also planning to expand its deanships network,” Wang said.

 

FAW Xiali's January-September net profit is expected to drop by at least 50% from the previous year due to fiercer competition in China's compact car market,  the company announced last week.

 

New vehicle sales in China rose nearly thirty percent on the average, while the subcompact market only grew 3 percent during the seven months. FAW Xiali, dubbed as "king of subcompact car maker in China", has suffered a sharp decline with the main products - Xiali N3, Vizi, Vela, and Weizhi. Sales of Xiali brand cars alone dropped 27.3 percent in the first nine months.

 

The company said sales of subcompact cars with displacement under 1.0 L were still sluggish, despite active promotions and repeated price-cuts.

 

FAW Xiali's third-quarter report is scheduled to be released on Oct. 29. The company, which holds 30-percent shares in FAW Toyota, a joint venture between China FAW Group Corp. and Toyota, reported a 40.3 percent decline in net profit for the first half year of 2007.

 

"We won't give up the subcompact car market with the shifting strategy,” said Meng Junkui, secretary of Board of Director of FAW Xiali, adding that the upcoming new products would be developed mainly by the company's independent R&D resources.