Family enthusiasm lifts Changan small-car sales

Chongqing Changan Automobile Co has seen its sales of small cars rise 52 per cent in the first quarter of this year, although the vehicle market is still undergoing a plodding recovery.

The mainland firm's vice-general manager Wang Chongsheng said: 'The [small] car market has rebounded from last year, although other types of [vehicles still] suffer from low sales to production ratios.' He said the rise was because small cars were being snapped up by ordinary families. Last year, the company sold 70 per cent of its budget cars to private individuals.

Private purchases have provided a new impetus for the market, which saw buying from government organisations curbed by austerity measures.

Between January and March, the Shenzhen-listed B-share company made 21,000 small cars, up 38 per cent from a year ago at its main factory, while it sold 52 per cent more (19,000 cars) during the period, Mr Wang said.

Changan planned to produce 120,000 small cars this year, including 100,000 from its main factory and 20,000 from its 51 per cent owned joint venture with Japan's Suzuki Motor and Nissho Iwai.

Last year, it produced about 78,000 cars, including about 70,000 from the main factory and 8,000 from the venture.

Mr Wang said Changan was free from inventory problems, because it sold almost everything it made last year.

As a result of keen market competition and an increase in production capacity, the company had slashed the ex-factory price of its Alto sedans by 10 per cent to 58,800 yuan (about HK$54,625) each in the first quarter, Mr Wang said. He expects the price to fall to 50,000 yuan when production capacity reaches 150,000 cars.

As one of China's three largest small-car manufacturers, Changan plans to boost capacity from 150,000 cars to 300,000 by 2000.

Mr Wang said it would cost 5.6 billion yuan for the expansion, of which 1.2 billion yuan would come from proceeds of its A and B shares. The balance would come from bank loans.

The expansion had been ratified by the State Planning Commission and was listed in the state plan.

Mr Wang expects the planned offering of 120 million A shares to raise about 700 million yuan. The company raised 580 million yuan in November, when it sold B shares.

Mr Wang said Changan was in discussions with car manufacturers from South Korea and the United States for co-operation.

Changan's small cars are mainly sold in China's southwest region.

Mr Wang said the company had begun to break into markets in Beijing, Tianjin and Shanghai.

RECOVERY Chongqing Changan small-car sales up 52 per cent in first quarter Private purchases fuel recovery after 38 per cent rise in production