Dongfeng Motor Corp, the State-run automaker seeking a Hong Kong stock listing, expects to sell more than 600,000 vehicles with a turnover exceeding 100 billion yuan (US$12.1 billion) this year.

The goal was revealed by Dongfeng President Miao Wei in an interview with China Daily on Monday.

"Our growth this year will be faster than that of the industry as a whole, which will put an end to consecutive declines of our domestic market share over the past years," Miao said.

Dongfeng was dwarfed by two other State-run vehicle producers - Chang'an Motor Corp and Beijing Automotive Industry Corp - to become the nation's No 5 automaker last year from its previous ranking of No 3 in terms of unit sales.

Its sales rose by a meagre 7 per cent year-on-year to 523,000 vehicles last year, Miao said.

Dongfeng reported 93.2 billion yuan (US$11.2 billion) in turnover in 2004, an increase of 17 per cent over 2003.

Miao predicted that total vehicle sales in China will grow by 10 to 15 per cent this year from 2004.

However, sales of domestically-made vehicles declined by 6.94 per cent year-on-year to 684,500 units during the first two months of 2005, according to statistics from the China Association of Automobile Manufacturers.

Vehicle output in China edged up 0.96 per cent to 739,200 units during the period.

"We also expect Dongfeng's profits to continue to grow this year," Miao said, after they posted a 23 per cent climb last year.

Figures on the company's website show it recorded 4.22 billion yuan (US$507 million) in profit last year.

"However, we are facing great difficulties this year, such as mounting material prices, mainly from steel, declining car prices on the domestic market and the strong euro," Miao said.

The biggest task for all automakers in China is to cut costs and maintain profit-making abilities, he said.

"Some players are likely to go under due to the State's macro-economic controls," he added.

Prices of domestically-made vehicles dropped by more than 13 per cent on average last year from 2003, in an effort by car makers to spur sales.

Analysts say prices will continue to slide by some 10 per cent in 2005.

On Dongfeng's expected listing in Hong Kong, Miao said: "Everything is in the process, but I can tell you nothing specific now... All assets of our core businesses, including those from our joint ventures (with foreign partners) will be incorporated into our new listed firm."

It was reported that Dongfeng planned to go public in Hong Kong last year but was delayed due to the slowing domestic auto market.

Dongfeng, which has a Shanghai-listed affiliate, runs four vehicle joint ventures with Japan's Honda and Nissan, PSA Peugeot Citroen of France and South Korea's Kia Motors. It also plans to build a 300,000-unit car joint venture with France's Renault, which controls 44 per cent of Nissan.

But the project has been suspended mainly due to ongoing management reshuffling at Renault and Nissan, Miao said.

"Things are expected to restart next month with the reshuffle completed," he said.

Sales of vehicles made in China grew by 15.5 per cent year-on-year to 5.07 million units last year.

But this was down from the 34 per cent of 2003, dragged by a number of factors, such as the State's macro-economic controls - especially those on car loans - high oil prices and consumers' reluctance to buy in anticipation of cheaper cars sparked by producers' frequent price cuts.

Source: China Daily