HONG KONG -- Denway Motors said on Tuesday production of an economy saloon, the Fit, by its China joint venture with Honda Motor Co. will be delayed by 1-1/2 months due to the SARS virus outbreak.
"The SARS outbreak caused some delay on the Fit production," Zhang Baoqing, deputy managing director of Denway, told reporters after the company's annual general meeting.
He said the venture, Guangzhou Honda Automobile, planned to use the spare capacity to make more Accord sedans, which have higher profit margins than Fit.
The company had hoped to start production of the Fit in July and begin sales in August but analysts said the delay in production could be positive for the company.
The venture's production plant is located in Guangzhou, one of the worst hit areas by the deadly Severe Acute Respiratory Syndrome (SARS) virus.
Last month the World Health Organization lifted its travel advisory on Hong Kong and Guangdong province but a travel advisory for Beijing and other parts of China is still in place.
"Guangzhou Honda could possibly make 5,000 Accords more than its target," said Lawrence Ang, an analyst at Deutsche Bank.
Honda Accords are very popular in China and the extra Accord production will lift Denway's 2003 profit by about four percent, Ang said.
Guangzhou Honda sold about 37,000 vehicles in the first five months of 2003.
It planned to sell 110,000 vehicles in 2003, including about 70,000 to 80,000 Accords and 20,000 Odyssey mini-vans. Earlier this year, it hoped to sell 20,000 Fit saloons this year with production to start in July and sales to be launched in August.
Analysts expected the Fit to be priced under 120,000 yuan ($14,493) against the Accord's price of about 260,000 yuan.