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TAIPEI, Sept 24 (Reuters) - Taiwan's largest car producer, China Motor Corp , said on Wednesday pretax profits at its mainland venture, South East (Fujian) Motor, would be down 10-25 percent from an earlier forecast due to rising competition.
The 50-50 venture with Fujian's provincial government, or Soueast, is expected to post a pretax profit of 900 million yuan (US$109 million), down from a previous forecast of 1.0-1.2 billion yuan, said China Motor's vice president Hsu Li-min.
"The mainland market has encountered price cutting recently, and Soueast has no way but to follow suit, resulting in eroding profit margins," Hsu told Reuters by telephone.
While China remains the world's fastest growing market for automobiles -- the revised 2003 pretax was still much higher than the 382 million yuan last year -- that growth has attracted more competition.
The previous upbeat forecast came after the venture won Beijing's approval to produce sedans in China, clearing a hurdle to cash in on one of the world's fastest-growing markets.
By 0330 GMT, China Motor shares rose 1.79 percent to T$57.0, while the main TAIEX index gained 0.49 percent.
China Motor is a unit of Yulon Group which includes Yulon Motor , Taiwan's third largest car producer.
Soueast, which started out in 1996 making several hundred vans, expects to sell 85,000-90,000 vans and sedans this year, down from the previous forecast of 100,000, Hsu said.
A number of global automakers have been targeting China, including General Motors and Volkswagen AG .
With cars rolling off Chinese production lines faster than manufacturers can sell them and billions of dollars in additional capacity still to come on line, the country's auto stocks are showing signs of overheating.
Many carmakers in China have slashed sticker prices this year as the market grows increasingly competitive, and watchers say further price cuts lie ahead.
(US$ = 8.28 yuan)