China’s Zhongsheng Plans 40 More Car Dealerships on Rising Sales

Zhongsheng Group Holdings Ltd. (881), China’s largest publicly traded automobile dealer by revenue, is proceeding with plans to add 40 sales outlets on expectations of continued growth while the country’s economic expansion slows.

Zhongsheng doesn’t expect demand for mid-level and luxury vehicles that are sold at its outlets to cool in China this year, Huang Yi, chairman and co-founder of the Hong Kong-based company, told reporters yesterday in New York. The new stores, including 20 under construction, are in addition to 140 already operating.

Higher-priced vehicles are “still enjoying high growth,” Huang said. “I feel that is quite sustainable. The strategy is to focus on the brands we’re already offering.”

The company sells autos for Toyota Motor Corp. (7203); Nissan Motor Co.; Honda Motor Co.; Daimler AG (DAI)’s Mercedes-Benz; Volkswagen AG (VOW), including its Audi and Lamborghini luxury brands; and Porsche AG.

The economy of China, the world’s most populous nation, grew 8.1 percent in the first quarter, less than estimates of 8.4 percent growth, the country’s National Bureau of Statistics said last week. The pace of growth was the slowest in two and a half years.

China’s vehicle sales this year will probably miss an 8 percent growth forecast as the slowing economy and rising fuel costs curb buying, Gu Xianghua, deputy secretary general of the China Association of Automobile Manufacturers, said last month, citing his personal opinion. Sales growth in China slowed last year to 2.5 percent from 32 percent in 2010.

The slowdown is mainly for “low-end” cars, rather than brands sold by Zhongsheng, Huang said yesterday. The company is the largest seller of Toyota’s Lexus luxury brand vehicles in China, he said.

Zhongsheng shares fell 0.1 percent yesterday in Hong Kong trading to HK$15.78. The stock has risen 22 percent this year.

To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net; Tim Catts in New York at tcatts1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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