Top Chinese automaker SAIC Motor Corp reported a 46.1 percent gain in its first-half earnings thanks to brisk sales of Buick and Passat models made at its Shanghai ventures.
SAIC is expected to register double-digit earnings growth for the full year, industry observers say, as pricier models made in partnership with Volkswagen and General Motors stay solid despite a cooldown of the world's biggest auto market.
"People are not motivated to buy cheap, local brands after the tax incentives for small cars are gone. But most foreign automakers are holding up pretty well as people are turning to bigger and more expensive cars," said Feng Yong, an analyst with Guodu Securities.
Beijing in 2009 introduced tax incentives for small cars and handed out subsidies for farmers who traded in old, oil-guzzling vehicles for more fuel-efficient ones.
China scaled back those incentives in 2010 and scrapped them completely at the end of last year.
In a stock exchange filing, SAIC warned of challenges in the second half, such as inflation hurting consumer confidence, but expressed optimism about growth in lower-tier cities.
SAIC, which earns roughly 60 percent of its sales from two car ventures, sold over 2 million vehicles in the first half, up 13 percent from a year earlier, vastly outpacing a 3.4 percent gain of the overall market.
For the full year, it aims to sell 4 million vehicles, company president Chen Hong had said, representing a 11.7 percent year-on-year growth.
From January to June, SAIC reported a net profit of 8.6 billion yuan, compared with 5.9 billion yuan a year earlier. The result beats an average forecast of 8.1 billion from three analysts polled by Thomson Reuters.