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Strong sales bode well for car industry

Updated: 2013-11-11 08:10
By Xu Xiao ( China Daily)

BYD Co Ltd had revenue of more than 38.7 billion yuan, an increase of 16.9 percent year on year.

Its net profit was 465 million yuan, rising 2,127.38 percent year on year.

BYD said its full-year net profit is likely to reach between 540 million and 580 million yuan, increasing between 570 percent and 619 percent.

The projection is based on the normal situation that the fourth quarter is a traditional peak season for the automotive industry, analysts said.

Great Wall Motor's performance in the period was not as good as expected, because its new Tianjin plant became operational ahead of schedule, thus adding more expenditure to the first three quarters.

Great Wall's newly released financial statement reported sales revenue totaling 14.36 billion yuan in the third quarter, an increase of 28 percent over the same period of last year and 5.1 percent over the second quarter.

Net profit was 2.08 billion yuan, rising 40.1 percent year on year while decreasing 4.8 percent from the second quarter.

In the first three quarters of this year, the company had sales revenue of 40.8 billion yuan.

Haima Automobile Group Co Ltd also predicted a dramatic growth of net profit, which is projected to stand between 185 million yuan and 215 million yuan, up between 200 percent and 250 percent year-on-year.

Its net profit in the third quarter was 25 times to 36 times over the same period of last year.

Another domestic brand Jianghuai had net profit of 740 million yuan in the first three quarters, up 81.2 percent year on year, although it was one of the few mainstream automakers that had passenger vehicle sales decline in this September.

However, many analysts said the surging financial figures were not merely driven by sales increase.

In addition, they said effective cost control and better utilization of production capacity can also lead to substantial profit growth.

For example, FAW Car reported that its product sales in the first three quarters only grew 22.9 percent year on year and revenue 15.7 percent, but its net profit is predicted to surge to more than 700 million yuan from deficit of 310 million yuan during the same period of last year.

In addition to lowered costs in imported components and better use of capacity, improvements to accounting techniques also have contributed to the profit growth, said Cao He, an analyst with Minzu Securities.

Despite the domestic brands' shining performance this year, some industry insiders said they are not optimistic about the automakers' long-term profit perspective.

They said as many joint ventures begin to lower prices of their products, the domestic brands' efforts in cost control will be offset.

It is especially challenging when local brands want to compete in the medium and high-end auto segment, analysts said.

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