BEIJING - Geely Automobile Holdings Ltd, whose parent owns Volvo Car Corp, boosted profit by 17 percent in the first six months as rising incomes in China increased car sales.

Net income rose to 938 million yuan ($147 million), Geely said in a statement to Hong Kong's stock exchange on Monday. That beat the 803-million-yuan average estimate of three analysts surveyed by Bloomberg.

Sales at the listed unit of Zhejiang Geely Holding Group Co rose 14 percent to 10.5 billion yuan.

"Rising sales volume and mid-sized cars such as the EC-7 helped improve Geely's profitability in the first half," said Harry Chen, an analyst with Guotai Junan Securities Co in Shenzhen.

"We are concerned about Geely's performance in the second half as China's overall vehicle sales growth has been falling at a faster pace than the market expected and it will hit local automakers harder than the joint ventures," Chen said.

Vehicle sales growth slid to 3.4 percent in the first six months, after the expiry of government incentives that helped boost deliveries in 2010.

Geely, BYD Co and other China-based automakers also face rising competition from overseas rivals such as General Motors Co, which introduced its local brand, Baojun, this month to cater to entry-level buyers.

The combined market share of Chinese local automakers fell to 40 percent in June from 47 percent at the end of last year, according to the China Association of Automobile Manufacturers (CAAM).

Geely's first-half exports rose 93 percent to 13,385 units, the automaker said. The growth in overseas sales provides a buffer if China sales decline, it said.

The company sold 213,381 vehicles in China during the first six months of 2011, up 9 percent year-on-year. Geely met 44.5 percent of its full-year sales target in the first half, it said on July 13.

China's auto sales may rise about 5 percent this year, CAAM said on July 8, paring its previous estimate for 10 to 15 percent growth.

The country's sedan market is in "slackening" condition, Geely said in its statement. Inflation and economic policy tightening pose "significant" threats, and the automaker will impose stringent cost controls and lift its cash reserves, it said.

The company maintained its full-year sales target of 480,000 units.

Bloomberg News

(China Daily 08/23/2011 page17)