JAC's share sale to boost output

Anhui Jianghuai Automobile Co last Friday said it is planning a new share sale to raise up to 2.8 billion yuan (US$426 million) for capacity expansion, becoming the latest auto maker looking to increase output even though the industry faces a threat of oversupply.

The light commercial vehicle producer said it would issue 150 million new shares, according to its statement to the Shanghai Stock Exchange.

The proceeds will be used to produce additional 240,000 units of mid-to-high class passenger cars per year as well as lift the annual production of its advanced gasoline engines to 200,000 units, the statement added.

JAC was among car makers that rushed to lift their annual output after vehicle sales in China, the world's largest auto market, surged 32 percent last year. Vehicle demand, however, cooled this year after government incentives expired, raising concerns of a looming overcapacity.

During the 12th Five-Year Plan period, which starts this year, combined output of China's major car makers is expected to reach 40 million units a year, a significant 45 percent jump from last year's production level.

Hefei-based JAC's 2010 net profit surged 243.8 percent year on year to 1.18 billion yuan, it said in a separate statement yesterday. It sold 442,547 vehicles, including 200,031 passenger cars that rose 62 percent from a year ago.