China's FAW Car saw losses in own brand sales

Shanghai, April 9 (Gasgoo.com) FAW Car Co, a unit of the China's largest automaker First Automotive Works (FAW) Group Corp., said that its two major own brand models, Besturn and Red Flag, lost a total of RMB 200 million ($28.5 million) last year, local news paper Beijing Morning News reported yesterday. 

The company announced that its net profit doubled to RMB 552.87 million in 2007 from RMB 276.53 million in the previous year, but this profit was not generated by its own three vehicle brands. Own brand passenger car model Besturn and Red Flag lost RMB 150 million and RMB 50 million respectively in 2007.

Mazda6 is the only profitable model of the automaker, with net profit rising 37.5% from a year earlier to RMB 47.8 million.

In an effort to reverse the slumping of demands for its models, FAW Car Co plans spend RMB 2.1 billion this year in three projects to boost its capacity and competitiveness, and more than 70 percent of the total investment will be injected into developing own brand vehicles.

The company will first invest RMB 821 million in developing a new own-brand car based on its Besturn platform, it said in a filing with Shenzhen Stock Exchange on April 2, cited by Bloomberg news.

It will spend RMB 575 million supporting production of the revamped Mazda6. It aims to build 60,000 revamped Mazda6s by the end of the year, it added.

Construction of the RMB 695 million engine plant, with an annual capacity of 90,000 units, is likely to take 18 months, the Changchun-based carmaker said. This plant will be used to develop self made engines.