Guangzhou Honda sales rise 56pc after expansion

PUBLISHED : Friday, 11 March, 2005, 12:00am
UPDATED : Friday, 11 March, 2005, 12:00am

Guangzhou Honda Automobile, 50 per cent held by red chip Denway Motors, sold 22,985 units of Accord and Fit sedans and Odyssey mini-vans in the first two months of this year, up 56.44 per cent from the same period last year.

Analysts said the high growth rate was due to last year's low base as the company doubled its annual production capacity to 240,000 units in the first quarter of last year.

Zeng Qighong, executive director of both companies, said the firm's tax rate would rise to 15 per cent this year from 7.5 per cent as its tax concessions expired at the end of last year. Guangzhou Honda enjoyed a tax holiday in its first two profitable years and paid 7.5 per cent in profit tax in the three subsequent years.

Mr Zeng said the company would compensate for increased raw material costs and a 6.5 per cent to 10.8 per cent price cut through cost reductions by increasing local parts sourcing and savings from greater production scale.

The local content utilisation rate stands at 92 per cent for Fit sedans, 73 per cent for Accord sedans and 70 per cent for Odyssey minivans.

'There is room for further component localisation and we will reap savings from lower import tariffs on components,' he said.