Economy vehicles showing growth for AviChina
By Xu Dashan (China Daily)
Updated: 2004-06-25 10:05

Vice-president Liu Cheng said that AviChina would try to produce and sell more than 350,000 cars this year.

It earned 14.7 billion yuan (US$1.8 billion) from selling cars, an increase of 24.7 per cent on the previous year.

During the first five months of this year, the company produced 160,000 cars and sold 155,000.

According to Liu, AviChina is the largest mini-car maker in China with more than 30 per cent market share.

"While continuing to consolidate the leading role in the mini-car (with emissions of no more than 1.1 litres) market, Avichina would pay more attention to development of economy cars with emissions between 1.1 and 1.6 litres," Liu said.

AviChina would increase the ratio of the economy cars to the company's total to more than 35 per cent this year, from last year's 22 per cent, he said.

Economy cars should become a new growth area of AviChina's future business expansion, according to Liu.

"We also have a plan to actively enter the medium-class cars market," he said.

"This will take place within two years."

Since 2001, the first year of the country's 10th Five-Year Plan, AviChina has invested about 3 billion yuan (US$361 million) upgrading old production lines or setting up new assembly lines.

Today, the company is capable of producing 450,000 cars and 600,000 automobile engines a year, Liu said.

Analysts said AviChina's increased role in the country's car market would further increase investors' confidence about the company's business outlook.

Car business is the largest source of income for AviChina, Liu said.

Last year, the car business generated more than 80 per cent of the company's total revenue, he said.

As China's economy expands further, AviChina also expects its helicopter and aircraft business to drive its future growth.

AviChina is the only domestic mass producer of helicopters and jets in China.

AviChina has a 49 per cent regional jet joint venture with Brazilian aircraft manufacturer Embraer to assemble the Brazilian firm's jets in China.

The central government's decision to develop the western part of the country and the success of Beijing's bid to host the 2008 Olympics will open up further opportunities and present a boom in the regional aviation market, according to Zhang Hongbiao, president of China Aviation Industry Corp II (AVIC II), parent of AviChina.

China is expected to add at least 400 to 500 small aircraft to its fleet in the next 20 years, according to an earlier report.

"Transport by regional jets will become a new growth area of the country's civil aviation industry in the coming decades," he said.

Zhang said his company was also betting on a huge demand for helicopters in the company's future growth.

Helicopters are used worldwide because they are easy to fly and land.

At present, China has less than 80 helicopters for general use, which means, for every 1 million people, there are only 0.06 helicopters.

This is far less than the world average of 3.9 helicopters per every 1 million people.

The use of helicopters is expected to grow significantly in the coming decades, he said.

AviChina and AVIC II will beef up international co-operation to develop more aircraft and helicopter models, moves which are welcomed by both domestic and foreign markets, he said.

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