French carmaker PSA Peugeot Citroen's joint venture with Dongfeng Motor Corp will make a profit this year after losing money over the past two years, the firm said.
The venture, based in Wuhan, capital of Central China's Hubei Province, aims to earn at least 400 million yuan (US$50 million) this year by boosting sales and cutting costs, said Liu Weidong, general manager of the venture.
If it happens, it will represent a big turnaround for the joint venture, called Dongfeng Peugeot Citroen.
Last year, the company's losses stood at 360 million yuan (US$45 million), compared with a 985 million yuan (US$123 million) loss in 2004.
"We have been making profits every month since last May," Liu Qixin, the venture's public relations director, told China Daily.
Dongfeng Peugeot Citroen's bold profit goal follows the rebounding financial performance of the whole auto sector in China because of soaring vehicle demand.
In the first quarter of this year, combined profits in the auto sector, including whole vehicles, spare parts, engines and motorcycles, jumped 82.7 per cent year on year to 15.4 billion yuan (US$1.9 billion), according to statistics from the China Association of Automobile Manufacturers.
Meanwhile, the vehicle manufacturing sector earned 8 billion yuan (US$1 billion) in profits, an increase of 145.3 per cent.
Last year, the whole auto sector's profits dropped by a quarter from 2004.
Dongfeng Motor, the joint venture's parent company, is apparently looking forward to profits contributed by the joint venture.
Dongfeng Motor, which has a 50 per cent stake in the joint venture, went public in Hong Kong at the end of last year.
It is the No 3 Chinese automaker after First Automotive Works Corp and Shanghai Automotive Industry Corp in terms of annual sales.
The joint venture said it aims to increase sales to 200,000 cars this year from 141,000 units in 2005, helped by new products.
It launched a Peugeot 206 hatchback in January and a Citroen C-Triomphe sedan last month.
It expects to sell 35,000 units of the 1.6-litre Peugeot 206 and 30,000 of the 2.0-litre C-Triomphe this year.
The two models are part of the French carmaker's nine new products planned for the venture up until 2009.
The venture will introduce a small Citroen car at the end of this year.
Liu Weidong said the venture plans to slash costs in management and industrial production by 1 billion yuan (US$125 million) this year.
PSA Peugeot Citroen and Dongfeng Motor is also planning to build a new plant to meet growing demand in China.
It is expected to come into operation before 2010, said spokesman Jean-Martin Folz, without revealing details.
Production capacity of the venture's existing plant will increase to 300,000 units at the end of this year from 220,000 units at present.
"China's car market will continue to expand thanks to its fast economic growth.
"It is the main growth engine of PSA Peugeot Citroen and is our priority market around the world," Folz said.
The joint venture sold 44,000 cars from January to March this year, up 33 per cent from a year earlier.
Source: China Daily
The venture, based in Wuhan, capital of Central China's Hubei Province, aims to earn at least 400 million yuan (US$50 million) this year by boosting sales and cutting costs, said Liu Weidong, general manager of the venture.
If it happens, it will represent a big turnaround for the joint venture, called Dongfeng Peugeot Citroen.
Last year, the company's losses stood at 360 million yuan (US$45 million), compared with a 985 million yuan (US$123 million) loss in 2004.
"We have been making profits every month since last May," Liu Qixin, the venture's public relations director, told China Daily.
Dongfeng Peugeot Citroen's bold profit goal follows the rebounding financial performance of the whole auto sector in China because of soaring vehicle demand.
In the first quarter of this year, combined profits in the auto sector, including whole vehicles, spare parts, engines and motorcycles, jumped 82.7 per cent year on year to 15.4 billion yuan (US$1.9 billion), according to statistics from the China Association of Automobile Manufacturers.
Meanwhile, the vehicle manufacturing sector earned 8 billion yuan (US$1 billion) in profits, an increase of 145.3 per cent.
Last year, the whole auto sector's profits dropped by a quarter from 2004.
Dongfeng Motor, the joint venture's parent company, is apparently looking forward to profits contributed by the joint venture.
Dongfeng Motor, which has a 50 per cent stake in the joint venture, went public in Hong Kong at the end of last year.
It is the No 3 Chinese automaker after First Automotive Works Corp and Shanghai Automotive Industry Corp in terms of annual sales.
The joint venture said it aims to increase sales to 200,000 cars this year from 141,000 units in 2005, helped by new products.
It launched a Peugeot 206 hatchback in January and a Citroen C-Triomphe sedan last month.
It expects to sell 35,000 units of the 1.6-litre Peugeot 206 and 30,000 of the 2.0-litre C-Triomphe this year.
The two models are part of the French carmaker's nine new products planned for the venture up until 2009.
The venture will introduce a small Citroen car at the end of this year.
Liu Weidong said the venture plans to slash costs in management and industrial production by 1 billion yuan (US$125 million) this year.
PSA Peugeot Citroen and Dongfeng Motor is also planning to build a new plant to meet growing demand in China.
It is expected to come into operation before 2010, said spokesman Jean-Martin Folz, without revealing details.
Production capacity of the venture's existing plant will increase to 300,000 units at the end of this year from 220,000 units at present.
"China's car market will continue to expand thanks to its fast economic growth.
"It is the main growth engine of PSA Peugeot Citroen and is our priority market around the world," Folz said.
The joint venture sold 44,000 cars from January to March this year, up 33 per cent from a year earlier.
Source: China Daily