China's major car makers' growth rate has declined sharply from last year despite both income and profits rising in the first half of this year in a difficult market plagued by rising raw material costs.
China's main auto makers revved up total profits by 30.4 percent to 43.4 billion yuan (US$6.38 billion) for the first six months, the China Association of Automobile Manufacturers said in a statement yesterday.
However, the growth rate was slower than the 35.38 percent recorded in the same period last year.
Auto analysts said that as market demand for cars remains weak in the second half, car makers were expected to confront more difficulties and pressure to ensure their profits continue to grow.
CAAM said car makers' profits were squeezed as the price of raw materials and energy continued to climb rapidly.
"Their profits have been under pressure because cost increases have been always higher than revenue increases," CAAM noted.
The association also attributed the drop in profit to the government's austerity measures such macroeconomic control as well as natural disasters the country suffered and an increasingly competitive global economic environment.
Car makers earned less profit because the overall auto market has cooled since April, haunted by soaring oil prices, high inflation and a lackluster stock market, industry sources said.
Half-year auto sales rose 18 percent to 5.18 million units from a year earlier, but the growth was 4.78 percentage points lower than a year earlier. The overall sales income expanded at a slower pace of 25 percent to 638.3 billion yuan during the same period.
Seventeen of the 19 top auto makers gained more revenue than they did last year. Yutong Group, China's leading bus and coach producer, topped the list boosting profit by 182 percent, followed by FAW Group Co at 161 percent and BYD Co Ltd at 138 percent.
(Shanghai Daily August 13, 2008)
