China Yongda Automobiles Services Holdings Ltd, the biggest BMW cars distributor in China, said it will continue to enhance investment in after-sales services -which generated nearly half of the company's profit - after oversupply cumbered car sales in the whole industry during the first nine months of the year.

Although car sales have been gradually picking in the fourth quarter this year after sluggish performance in the past few months, the revenue contribution generated from automobile-related services have been a stable source of income for the group, which posted a higher profit margin and registered growth momentum despite uncertainties continuing to haunt the industry, Wang Zhigao, vice-chairman of China Yongda told a group of Hong Kong media in Shanghai on Friday.

In the first six months of the year, revenue generated in after-sales services business expanded by 46.9 percent to 972.8 million yuan, while the gross profit margin for after-sales services also rose from 38.8 percent to 43.6 percent during the period, a far cry from the 7.9 percent gross profit margin of the group registered for the period.

The gross profit of 424.1 million yuan from after-sales services has accounted for about 45 percent of the group's total gross profit, which recorded 943.1 million yuan during the first six months on slowing luxury car sales amid lukewarm economic environment, according to its financial statement to the Hong Kong Stock Exchange earlier.

The 43.6 percent gross profit margin from the services department still leaves room for some further hikes, as demand for such services remain buoyant and the competitive advantages in its after-sales services owned by the company, given its leading positions in luxury car sales in the eastern part of the country.

At the same time, the group's luxury car sales have also been picking up in the fourth quarter after sales volume decreased in the first half with some notably price discount for car sales on the mainland, according to Wang.

Data released by the China Passenger Car Association showed that car sales rose 11.7 percent year-on-year in October on the mainland despite some 56.5 percent sales decline of Japanese-branded vehicles, signifying improved car sales momentum in the country.

The Chinese car dealers have been through some of the hardest times in recent months and they expect to see a rebound from the bottom in the market. The luxury auto market is also expected to outpace the industry average as new capacities are released together with the launch of new compelling models, according to a research report by Oriental Patron Securities Ltd.

China Yongda, which primarily sells luxury car dealerships across the mainland, raised $216 million in its initial public offering in Hong Kong this July. Although Japanese-branded car sales recorded a sharp decrease on the mainland this year, Wang said the company is less affected as the sales of Japanese cars only accounted for about 5 percent of the group's revenue in China Yongda.

litao@chinadailyhk.com

(HK Edition 11/27/2012 page2)