Shares of subsidiaries of Taiwan's largest auto maker, Yulon Group, staged a rally in Friday morning trade amid optimism over the group's earnings outlook, dealers said. Yulon Nissan Motor rose 6.77 percent in early trading to NT$142.00 (US$4.68) , while Yulon Motor gained 2.73 percent to NT$60.30 and China Motor added 2.75 percent to NT$28.05. The benchmark weighted index was up 0.77 percent at 8,347.12. Group CEO Kenneth Yen said a day earlier that he expects the net profit of the group's auto business to hit NT$15 billion in 2010 and rise to between NT$16 billion and NT$17 billion in 2011 as the local auto market recovers. According to Yen, the sales volume of the domestic auto market is expected to reach 320,000 units in 2010 and grow to 340,000 units in 2011. 'Yen's remarks ignited today's buying in auto stocks, ' Horizon Securities analyst Benson Huang said. 'His optimism has cemented the market's faith in the auto sector.' In addition to the growing domestic auto market, Huang said, many investors have embraced high hopes that the Yulon Group will further benefit from its investments in China. 'China's 12th five-year economic development plan has targeted the auto industry with the aim of boosting auto sales by promoting the sector in the hinterland,' Huang said. 'The fast-growing Chinese economy is paving the way for strong demand in cars on the back of the government's development policy, ' Huang said. The upcoming five-year development plan will kick off in 2011. Yulon Nissan Motor has set up a joint venture with China's Dongfeng Motor Corp. and the market expects the Taiwanese company to generate handsome profit from the investment. Meanwhile, the joint venture is planning to sell luxury Luxgen models in China in the first half of next year after obtaining permission for production and sales from the Chinese authorities in August. Luxgen Motor Co. Ltd. is a wholly owned unit of Yulon Motor. Huang said investors' enthusiasm toward the Yulon Group also spread to other auto stocks in Friday trade. 