Changan Auto's net profits rise 28% in 2007

Shanghai, March 27 (Gasgoo.com) Chongqing Changan Automobile Co., one of China's major carmakers, recently announced that its net profit in 2007 has reached RMB 667 million, representing a 28% increase over the previous year. Overall revenues grew by 12.9% year-on-year (y/y) to RMB 13.72 billion ($1.95 billion) as the number of vehicles sold leapt 25.2% y/y to 770,546 units.

Last year, profits made by the Chongqing-based Chinese automaker rose by 28.39% y/y to RMB 666.89 million. Profitability at its joint venture with Ford and Mazda rose by 46.7% y/y to RMB 1.92 billion, while its joint venture with Suzuki struggled over the course of the year, its profits having slumped 43.7% to RMB 123.2 million.

Looking toward the future, Changan Auto said that it is aiming to produce 890,000 units during 2008 and to achieve revenues of RMB 16.3 billion, although it added that in order to meet these goals it will need working capital of around RMB 1.25 billion per month and capital expenditure of RMB 2.99 billion.

The car maker is said to have made moves toward an initial public offering (IPO) in the stock market to finance its plans for continued growth, including an optimistic sales target of about 2 million units a year by 2010, coming mostly from its self-developed models.

However, in terms of the increasingly competitive nature of the Chinese auto market, it seems difficult for the automaker to hit such an ambitious target.

Based in China's southwestern city of Chongqing, Changan Auto  is the country's largest mini-van maker and fourth-largest vehicle manufacturer.