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Listed commercial vehicle makers see large Q1 profit decline

Most listed automakers witnessed sales slips in the first quarter of 2015 with commercial vehicle makers the hardest hit. Net profit of most dealers also declined drastically due to the shrinking market, according to a recent report in Beijing News.

Enterprises with sales increase

BYD posted ¥120 million ($19.35 million) in net profit in the first quarter, up 910.75 percent on a yearly basis. However, the company’s net profit shrank to ¥40 million after reducing recurring profit and loss. About 54 percent of the net profit, or ¥65 million, came from government subsidies. BYD estimates a net profit of ¥400-¥480 million in the first half of 2015, up 10.9-33.08 percent on a yearly basis.

Dongfeng Automobile Co., Ltd. saw net profit increase 280 percent to ¥137 million. Net profit of Haima Auto jumped 119.99 percent to ¥129 million. Haima attributed the growth to the 15 percent increase in sales volume and the company’s adjustment to production structure.

Profits at Great Wall Motor and Chang’an Auto also grew steadily in the first quarter with net profit rising 29.41 and 26.45 percent respectively to ¥2.49 billion and ¥2.53 billion. According to securities analysts, both companies benefited from SUV sales.

Net profit of SAIC Motor and Lifan grew only 6.98 and 1.46 percent to ¥7.47 billion and ¥118 million respectively, according to official company data.

Commercial vehicle makers the hardest hit

The commercial vehicle market continued to shrink in the first quarter with 847,900 units sold, down 19.48 percent. Most listed commercial vehicle makers saw large slides in net profit.

Zhongtong Bus posted huge decrease of 95.34 percent to ¥87 million in net profit. According to the company, it realized profit of ¥189 million by regaining all shares of its subsidiary, the Zhongtong Real Estate Development Co., Ltd. in 2014, which led to a large decline of the Q1 profit compared with that of 2014.

Sales of Beiqi-Foton decreased 21.5 percent to 135,300 units and net profit reached ¥125 million, down 42.01 percent.

Sales of China National Heavy-Duty Truck Corp. (CNHTC) decreased 11.61 percent with net profit down 29.35 percent to ¥65 million.

Although Jiangling Motors Corp. (JMC) posted sales increase of 5 percent to 70,500 units, net profit at the company slipped 4.11 percent to ¥570 million.

King Long Motor Group, on the other hand, performed quite well in the first quarter thanks to the large sales increase of new energy vehicles (NEVs). Net profit of King Long jumped 190.53 percent to ¥39 million.

Yutong Group, the leading large and medium bus manufacturer in China, saw a slight increase of 5.19 percent in net profit to ¥374 million.

Tough times for dealers

Early warning index of dealer inventory was 67.5 percent in March, up 16.6 percent month-on-month, which was above the alert level and also the new high since 2014, according to China Automobile Dealers Association (CADA). Automobile dealer comprehensive inventory index was 1.77 in the first quarter, down 6 percent on a monthly basis and up 28 percent on a yearly basis, indicating high inventory pressure to dealers.

Listed dealer groups such as Pangda and Yaxia continued their deficit of the last year with large slip of profit in the first three months.

According to the Q1 financial report of Yaxia, although the company posted sales revenue of ¥1.41 billion with an 8.57 percent growth, it lost ¥11 million, down 159.32 percent year-on-year. Government subsidies were ¥21 million less than the same period of last year, said Yaxia. The company also attributed the deficit to small return on investment into 4S stores in recent years. Increasing fixed cost, labor cost as well as financial cost all led to the profit decline.  

Pangda reported sales revenue of ¥13.71 billion in the first quarter, down 17.34 percent. Net profit dropped 54.7 percent to ¥36 million, said the company.

Certain dealer groups still witnessed net profit growth during the gloomy period. For example, Shanghai Shenhua Holdings posted net profit increase of 204.59 percent to ¥ 44 million in the first quarter. Large sales growth contributed to net profit increase, said the company.

(Rewritten by Jennifer Chen based on author’s article in Beijing News)

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