* Dongfeng sees China car sales up 15 pct/year through 2012
* Says not considering bid for Volvo
* Lifts 2009 sales target by 18 pct (Adds details and share price)
Dongfeng Motor Group (0489.HK), China's No.3 carmaker, said it expects the domestic market to grow an average 15 percent over each of the next three years, fueled by strong appetites among an emerging middle class.
China's auto industry has been challenging and volatile since the second half of 2008 amid the global financial crisis, but it has started to recover this year on stronger domestic demand under the government's stimulus policies.
The penetration rate of passenger cars in China, which has became the world's largest auto market, remained very low, said President Liu Zhengming.
As second- and third-tier cities develop, we expect the market to see 20 percent growth in 2010, and 15 percent in the next three years, Liu told a media briefing on Wednesday to discuss the company's first-half results.
We are optimistic about the development of China's auto industry. The market is having 10 years or more of speedy growth, he said.
He added that Dongfeng had raised its 2009 sales target 18 percent to 1.3 million vehicles, from 1.1 million.
Dongfeng sold 735,824 vehicles in the first seven months of 2009, up 11.6 percent from the same period last year. Passenger car sales rose nearly 30 percent to 546,729 units for the January-July period, but commercial vehicles sales fell 20.6 percent to 189,095 units, the company said. The carmaker reported a 5.4 percent rise in first-half net profit to 2.61 billion yuan, beating the consensus for a flat first half. [ID:nHKF080367]
NO PLANS FOR VOLVO BID
Dongfeng, a joint venture partner of Honda (7267.T), Nissan (7201.T) and PSA Peugeot-Citroen (PEUP.PA), also said it was interested in overseas assets but would proceed with caution.
Our group has been taking a relatively cautious approach toward M&As and any possible targets must compliment the company and create synergy, said Vice-President Zhou Wenjie.
Dongfeng had discussions with Volvo AB (VOLVb.ST) on possible strategic co-operation in the commercial vehicles business three years ago but the talks stopped as Volvo had to clear up its China business, Zhou said.
Volvo is now withdrawing from its China truck venture with the state parent of Sinotruk (3808.HK), triggering speculation that a tie-up with Dongfeng may be possible as regulatory hurdles clear.
Volvo's clear-up hasn't finished yet and we may look at it after that, Zhou said. But Dongfeng had not considered bidding for Volvo, a unit of Ford Motor (F.N), he added.
Dongfeng's share price more than tripled this year, outperforming the benchmark Hang Seng Index .HSI, which gained 42 percent. Its stock closed down 3 percent on Wednesday before the results were announced. (Editing by Doug Young and Chris Lewis)