February 17 -- FAW Car (000800) plans to invest 1.51 billion yuan of internally generated funds in a technology upgrading project for Mazda vehicles, and upon completion, the company's production capacity of Mazda vehicles will hit 60,000 units per year, reports Oriental Morning Post.

Of the total amount, 736 million yuan will be invested in the construction of new production facilities, 135 million yuan will be spent on research and development, and the remaining 642 million yuan will be used as working capital.

The technology upgrading will take a period of 33 months. The internal rate of return is 27.27 percent, while the break-even period is 6.38 years.

According to FAW Car, the technology upgrading will optimize its product mix, improve competitiveness, profitability, maintain market share, and help the company to achieved balanced growth.

In addition, FAW Car plans to invest 146 million yuan to upgrade the technology of a welding factory over a period of 19 months. The project has an internal rate of return of 19.09 percent, and a break-even period of 5.47 years.

FAW Car said the technology upgrading will help to maximize capacity to meet future production requirements, aid in quality control, and help to achieve its mid and long-term strategic goals.

FAW Car revised its profit warning, predicting a 80-98 percent drop in 2011 net profit, compared with the previous forecast of a 50-80 earnings decrease.

The company expects 2011 net profit will range from 37.2 million yuan and 372 million yuan, with earnings per share of 0.0229 -0.2286 yuan.

According to FAW Car, it suffered from the tight monetary policy, the termination of policies encouraging auto purchases, oil price increases, and fierce competition.