Shanghai Automotive Co.'s second-quarter profit surged almost fivefold, after the purchase of stakes in ventures with Volkswagen AG and General Motors Corp. transformed the company into China's biggest automaker. Net income surged to 1.56 billion yuan ($206 million) from 318 million yuan a year earlier. Sales rose to 25.9 billion yuan from 2.39 billion yuan.
The figures were derived by subtracting first-quarter earnings from first-half numbers released by the Shanghai-based company Monday. The company couldn't be reached for comment on the derived numbers.
Shanghai Auto has developed its own car brand, purchased 19.1 billion yuan in assets from its corporate owner and might add Nanjing Automobile Group Corp.'s trucks and MG cars to tap China's surging growth. The country's car market has more than tripled in the past five years.
"The company will be even more competitive if it catches up in commercial vehicle manufacturing," said Yu Bing, a Shenzhen, China-based analyst with Pingan Securities Co., who has a "buy" rating on the stock. "Sales from the Volkswagen venture have been driving Shanghai Auto's growth."
Shanghai Volkswagen Co., the automaker's venture with Volkswagen, boosted second-quarter vehicle sales 33% to 115,955. Shanghai General Motors Co. and SAIC-GM-Wuling Automobile Co., its GM ventures, raised their combined sales 26% to 272,911.
Shanghai Auto, which has a bigger market value than GM, also introduced its first own-brand Roewe sedan in February. The company had sold 7,632 Roewes by the end of June. The car is based on design rights acquired after the collapse of British automaker MG Rover Group Ltd.
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