Manufacturing News

Dongfeng Motor profits down 10% due to Japan quake

Dongfeng Motor Group Co., the Chinese partner of Nissan Motor Co. and Honda Motor Co., posted a 10 percent decline in first-half profit as sales were hurt by slowing demand and production disruptions caused by Japan's earthquake.

Net income in the first six months totaled 5.9 billion yuan ($925 million), down from 6.5 billion yuan a year earlier, the company said in a filing to the Hong Kong stock exchange.

The automaker suffered production disruptions after Japan's March 11 earthquake caused parts shortages and electrical blackouts at Nissan and Honda. Sales also slowed in China this year after the government reinstated a 10 percent sales tax on small cars and phased out scrappage subsidies in rural areas.

First-half sales at the Wuhan, Hubei province-based Dongfeng rose 3 percent to 63.7 billion yuan. Dongfeng's vehicle deliveries were comparable to industry sales, which rose 3.4 percent in the first six months, according to the China Association of Automobile Manufacturers.

Economic Uncertainty
China will face economic uncertainties in the second half and the automobile industry may "grow at a slower speed as compared to the corresponding period of 2010," said Dongfeng, which has a market share of 11 percent in China.

In June, Nissan restarted normal operations in China as the company prioritized shipments of auto parts to the country and North America, said company spokesman Shiro Nagai.

On July26, Dongfeng's joint venture with Nissan announced plans to invest 50 billion yuan by 2015. The partners will increase the number of dealerships to 2,400 from 1,400, and aim to raise annual auto sales to more than 2.3 million units from 1.3 million units.

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