Dongfeng Motor Group Co posted slower profit growth in the first half of this year as commercial vehicle sales suffered due to the weak macro economy.
Net income of the nation's third-largest auto company rose 5 percent to 2.6 billion yuan (US$381 million) for the first six months, compared to 2.47 billion yuan a year earlier, Dongfeng said in a filing to the Hong Kong Stock Exchange yesterday.
Revenue increased 3 percent on year to 39.05 billion yuan.
Although Dongfeng's profit improved as government stimulus measures spurred vehicle demand, the growth was slower than the 7.2 percent increase for last year and below the 27 percent jump in the first half of 2008.
Shares of Dongfeng dropped 5.18 percent to HK$8.6 (US$1.1) yesterday.
China's industrywide auto sales gained 17 percent on year in the first half of this year. The gain came after the central government lowered vehicle taxes and offered financial subsidies to rev up the slumping auto market that was hit hard by the global financial crisis.
Dongfeng, the Chinese partner of Honda Motor Corp and Nissan Motor Corp, sold 610,000 vehicles in China from January to June, an increase of 4 percent year on year.
Passenger car sales rose 23 percent on year while the commercial vehicle segment witnessed a 27.5 percent slump during the same period.
"Although commercial vehicles sales dropped due to a number of factors, the month-on-month decline narrowed," Xu Ping, chairman of Dongfeng, said in the report.
Industry analysts expect Dongfeng to further improve profitability in the second half as sales of commercial vehicles are expected to rebound as the economy strengthens.
(Shanghai Daily August 26, 2009)