SAIC Motor Group Corp reported an 86 percent decline in net profit for last year as a result of slowing vehicle sales and its South Korean unit Ssangyong Motor Corp entering receivership.

Net income dropped to 656 million yuan (US$96 million) or 0.1 yuan per share last year, compared to 4.6 billion yuan and 0.7 yuan per share in 2007, the nation's biggest car maker said yesterday.

Sales revenue was up 1.44 percent to 106 billion yuan during the same period.

The car maker attributed the loss to the global financial crisis and the cooling vehicle market in China that put the breaks on sales and intensified competition.

Huge losses were also racked up by SAIC's South Korean sport utility vehicle subsidiary Ssangyong, which filed for bankruptcy protection in February. SAIC paid US$500 million for a stake in Ssangyong in 2004. But by the end of November last year, the 51 percent stake owned by SAIC was valued at just US$270.7 million.

In a separate statement, SAIC said profit was down 49 percent for the first quarter to 627 million yuan after it took over smaller rival Nanjing Auto. Sales fell 5.8 percent to 27.2 billion yuan.

SAIC estimated China's total vehicle sales for this year would remain at the same level as in 2008, at around 9.35 million.

However, government incentives and increasing demand in second and third-tier cities would create opportunities, said the auto maker.

SAIC aims to sell 1.8 million vehicles and gain a sales revenue of 119.4 billion yuan this year.

Last year, SAIC sold a total of 1.82 million vehicles, an increase of 8 percent from the year before.

(Shanghai Daily April 29, 2009)