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Old 04-28-2008, 11:24 AM   #26
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SAIC profit rises on China's Volkswagen car demand.

SAIC Motor Corp., China's biggest automaker, boosted first-quarter profit 7 percent after selling more cars at ventures with Volkswagen AG and General Motors Corp.

Net income climbed to 1.24 billion yuan ($177 million), or 0.191 yuan a share, from 1.16 billion yuan, or 0.177 yuan, a year earlier, the Shanghai-based carmaker said in a statement to the city's stock exchange. Sales rose 14 percent to 28.9 billion yuan from 25.5 billion yuan.

SAIC Motor's auto sales growth trailed the total market because of cooling demand for Buick Excelles made by its venture with GM. The company tripled profit last year after buying 19.1 billion yuan of assets from its parent to gain direct access to the world's second-largest vehicle market.

"Given the company's huge base and rising raw material prices, it will be more and more difficult to maintain fast profit growth," said Zhang Xin, an analyst with Guotai Junan Securities Co. in Beijing.

SAIC Motor's vehicle sales climbed 15 percent in the first quarter to 463,683, according to the China Association of Automobile Manufacturers. The overall market expanded 21 percent. China is likely to surpass the U.S. as the world's biggest car market by 2015, according to Volkswagen.

Sales growth at GM, which only builds vehicles in China through ventures, slowed to 7.4 percent last quarter, trailing Volkswagen as Chinese drivers shunned GM's Excelle in favor Volkswagen Santanas. Volkswagen builds the Santana through a separate venture with SAIC Motor.

GM's first-quarter sales in China were also hit by the country's worst snowstorms in five decades, which disrupted the delivery of parts and shipments of new vehicles from minivan- maker SAIC-GM-Wuling Automobile Co.

SAIC Motor agreed to buy Nanjing Automobile Group Corp.'s auto-making units late last year to add new models including MG cars and trucks.
source: Bloomberg
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