Shanghai Automotive and Chongqing Changan Automobile warned over the weekend their net profit would decline by more than 50% in the January-June period from a year earlier, marketwatch.com reported.
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Both companies cited higher raw material costs as one reason for the expected declines.
Shanghai Automotive Co., a major auto parts maker in China, said its net profit in the first half of 2004 was CNY1.43 billion. The company is a unit of Shanghai Automotive Industry Corp. (Group), which has partnerships with General Motors and Volkswagen.
Changan Automobile, a partner of Ford in China, reportedly said its net profit in the first half of 2004 was CNY798.7 million. The automaker cited increased price competition in the country’s auto industry for the expected decline in first half net profit.
Marketwatch.com noted that increasing competition in China’s auto market has recently led to a series of price cuts. Government credit controls, meanwhile, have helped curb sales growth in the once-booming sector.
In June, the National Bureau of Statistics said China’s total sedan output in the first five months of this year was 1.07 million units, up 0.9% compared with the same period of 2004.
Growth in the output and sales of sedan cars in China in the second half should outpace the first half of the year, the bureau said at the time, according to marketwatch.com.
