Sales rise 55pc at Denway venture

PUBLISHED : Tuesday, 21 February, 2006, 12:00am
UPDATED : Tuesday, 21 February, 2006, 12:00am


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Guangzhou Honda Automobile, a 50 per cent-owned subsidiary of Denway Motors, sold 18,498 cars last month, up 55.7 per cent on its January sales last year.

The joint venture with Japan Honda Motors has become the main profit driver for Denway after doubling its annual production capacity to 240,000 units in the first quarter of 2004.

Analysts attributed the latest jump in monthly sales to the fact that the expanded production line had finally hit its capacity output, just in time for higher demand associated with increased spending over the Lunar New Year. Industry sources said the biggest contribution to the increased sales came from the newly released 2006 Accord model.

Denway had now targeted sales from Guangzhou Honda at 260,000 units this year, they added.

In a press release announcing the sales volume, Guangzhou Honda did not disclose the price at which it sold its new Accord models.

The brand was dragged into a price war last year and saw its price cut between 6.5 per cent and 8.7 per cent, while the price of the Odyssey model was slashed by about 11 per cent, industry sources said.

With a fresh focus on its Guangzhou car-making joint venture with Honda, Denway has begun a process of reconstruction. It sold its bus-making subsidiary Guangzhou Denway Bus last week to its immediate controlling shareholder, China Lounge, for $18.88 million. China Lounge is 100 per cent owned by Denway's parent, Guangzhou Automobile.

Meanwhile, Guangzhou Automobile plans to list in Hong Kong. Group vice-general manager Ding Baoshan said hiving Guangzhou Denway Bus off to China Lounge would not affect the attractiveness to investors of Guangzhou Automobile, adding it was a standard consolidation of businesses within the group.

A number of other large carmakers in China - Shanghai Auto, Guangzhou Auto, Beijing Auto and First Auto - have also expressed a wish to list in Hong Kong.

However, market sources said institutional investors were cautious about mainland vehicle stocks because of overcapacity, which had led to a crippling price war.