Profits in China's automobile sector dropped sharply in the
first two months of this year owing to declines in vehicle sales
and prices in the domestic market and soaring costs, according to
the National Bureau of Statistics (NBS).
The auto sector reported a combined 3.5 billion yuan (US$422.7
million) in profit in the January-February period this year, down
61.5 percent from a year earlier, said Jiang Yuan, an analyst from
the NBS.
The profits of more than 100 automakers dove 78.4 percent
year-on-year to 1.3 billion yuan (US$154.6 million) during the
period, Jiang said, putting more than half of them into the
red.
Of the nation's top 34 automakers, 10 saw profits plunge and 13
reported losses in the first two months of this year.
Profits in the spare parts and components segment slumped more
than 20 percent from a year ago, the first year-on-year decline in
a decade.
"This is a poor start for the auto sector and shows that a
full-year profit slump will be inevitable in 2005 from last year,"
Jiang told China Daily.
He blamed the decline mainly on manufacturers' weakening vehicle
sales and frequent price cuts.
A total of 684,500 units made in China were sold during the
period, down 6.9 percent from the same period last year, according
to industry statistics.
Sales of domestically made passenger vehicles slipped 8.9
percent year-on-year to 456,300 units.
Almost all of the car producers in China, including Sino-foreign
joint ventures, cut prices in an effort to boost sales.
In January, BMW slashed prices of its 3 and 5 Series sedans,
built at its joint venture in northeastern Liaoning Province, by
50,000 to 100,000 yuan (US$6,000 to 12,000), the biggest price cuts
in the domestic car market so far this year.
"High steel prices and the strong euro are also eating at the
profits of vehicle producers in China, especially European
automakers' joint ventures," Jiang said.
Domestic steel prices will remain on the bullish side this year,
buoyed by skyrocketing iron ore costs, according to the China Iron
and Steel Association.
(China Daily April 4, 2005)