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Changan Auto's 4th-quarter profit soars sixfold on Ford cars

(Bloomberg)
Updated: 2007-04-12 15:28

Chongqing Changan Automobile Co., which makes vehicles in China with Ford Motor Co. and Suzuki Motor Corp., boosted its fourth-quarter profit sixfold, as demand rose for Ford Focus compact cars and Mondeo sedans.

Net income soared to 113.4 million yuan ($14.7 million) in the three months ended Dec. 31, from 20.3 million yuan in the same quarter in 2005, based on Bloomberg's subtraction of nine- month results from 2006 figures reported today. Sales in the quarter rose 28.4 percent to 7.45 billion yuan.

Changan has benefited from Ford's investment of more than $1.5 billion in China since 2003. The company's joint venture with Ford, which added four new and revamped models in 2006, will boost its annual capacity to 410,000 units by the end of this year, helped by a new plant in Nanjing, eastern China.

"Changan Auto's profit engine is the Ford-brand vehicles," said Song Bingshen, an analyst at China Securities Co. in Beijing. "The strong sales growth of Focus compact cars has enabled the company to minimize price cuts."

Changan Ford Mazda Automobile Co. sold a record 129,790 Ford-brand vehicles last year, including 78,430 Focus compact cars and 47,651 Mondeo sedans. Changan owns half of the joint venture, while Ford owns 35 percent and Mazda Motor Corp. holds 15 percent.

The venture started selling locally made Volvo S40 sedans on July 17 last year. It also introduced new versions of Mazda3 and Focus hatchbacks and a revamped Mondeo sedan last year.

Changan Ford Mazda cut the price of locally made Mondeos by as much as 5.6 percent in July 2006 to increase sales.