China's privately-owned auto maker Geely Automobile Holdings is set to raise its sales target by 80 per cent this year and expand its exports despite a disappointing result last year.

Geely plans to produce and sell 120,000 vehicles this year, up from 66,057 last year.

It sold 28,670 vehicles in the first quarter this year, close to one quarter of the full-year target.

To support the rapid sales expansion, Geely has lifted its production capacity by 50 per cent to 300,000 vehicles and plans to further double to 600,000 by 2007 with the expansion of its Ningbo plant.

The company hopes to raise its mainland market share to 5 per cent this year from the current 4.2 per cent.

And it aims to sell 9,000 vehicles in the Middle East and Africa after exporting 5,000 to Syria in 2004.

Asked whether it would explore the US market as well, Executive Director Lawrence Sui Lun Ang said that some US firms have expressed interest in the company's cars. However, the company has to study if it can match the US standards.

"Developing the export market is the company's medium-and-long-term strategy," Ang stressed.

Capital expenditure for 2005 is HK$700 million, up from HK$600 million in 2004.

Geely scaled down its capital expenditure last year from an initial HK$1 billion in the face of a downside in the mainland car market.

As a result, the expansion of its Ningbo plant was postponed until this year.

Despite 139 per cent sales growth last year, the average sales price dropped by 10 per cent due to the acquisition and selling of the lower-end Haoqing series.

Net profit per vehicle thereby decreased 42 per cent to HK$3,046 and gross profit per vehicle slipped by 8 per cent to HK$5,283.

Net profit for the second half of 2004 plunged by 44 per cent from HK$54 million in the first half to just HK$30 million.

Full-year profit rose 47 per cent to HK$84 million, lagging far behind the HK$133.8 million of Reuters estimates.

Turnover increased by 3 per cent to HK$41 million.

"The Chinese car market was in general in downside for the year 2004, but vehicles priced at under 80,000 yuan (US$9,600) are still highly favourable to the market," Ang said.

According to a report conducted by the National Bureau of Statistics, released last Friday, vehicle sales on the mainland shrank by 2.8 per cent to 566,900 in the first quarter of 2005 compared with the same period last year.

On a monthly basis, vehicle sales in March dropped by 1.6 per cent to 246,000 against the same period last year. "The market is basically just supported by the sales of low end vehicles," the report said.

Ang expected that it would sell 60,000 Haoqing series this year, with its share in total sales accounting for 50 per cent.

Shares in Geely rose 1.11 per cent to close at HK$0.455 yesterday after having lost 44.5 per cent in the past year .

(HK Edition 04/29/2005 page3)

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