Changfeng Motors reports a 613% surge in 2007 earnings

Shanghai, March 28, 2008 (Gasgoo.com) Hunan Changfeng Motors Co. released its 2007 annual report today. The Chinese home-grown automaker earned RMB 167.98 million ($23.8 million) last year, up 613.6% over the previous year. Also it's set to announce a joint venture plan with Japan's Mitsubishi Motors Corp within three months, a Changfeng executive said on Wednesday.

In 2007, Changfeng Motors generated sales revenue of RMB 4.56 billion, a 8.67% increase over 2006. Its gross profit stood at RMB 166.34 million, an increase of 474.5 percent. The auto-making division made a RMB 4.38-billion revenue, up 8.59% year on year.

Last year, Changfeng sold 25,000 SUV vehicles, ranking fourth in China’s SUV market. For this year, it aims to sell 65,000 vehicles and launch three new models in the Chinese market.

JV program with Mitsubishi nearly finalized

During the first half of this year, Changfeng will finalize its 50-50 joint venture program with Mitsubishi, said Michiyuki Suzuki, general manager of Changfeng Mitsubishi Sales Co., who made the remarks yesterday after announcing the launch of 2008 Pajero SUV.

Changfeng, 16.07% owned by Mitsubishi Motors Corp., produces a SUV vehicle Liebao on its own and Pajero SUV for Mitsubishi. Earlier this week, Changfeng released a compact sedan -- the Kylin, also Changfeng’s first sedan model.

"Changfeng’s sales banks heavily on the Pajero SUV only and it indeed has established a firm market position in this particular segment, especially in the western and southern parts of China,” said Richard Sun, automotive analyst at Essence Securities in Shanghai. But Sun kept cautious about Changfeng’s foray into the passenger vehicle market.

Overseas expansion: Hammer could be partner

Apart from forming a JV with Mutsubishi and moving into sedan manufacturing, Changfeng is considering further overseas expansion. Chen Zhengchu, general manager of Changfeng Motors, confirmed an earlier report that the company was in discussion with a foreign SUV manufacturer on potential cooperation.

Chen said that Changfeng could export knock-down kits to America and the local partner could assemble and sell them; or Changfeng could produce the SUVs with the chassis provided by the US partner and then export the completely built-up vehicle. He refused to reveal the American automaker’s name, but the foreign media’s rumor is that the partner could be Hammer.