China’s SAIC Motor expects an over 50% fall in unaudited net profit in 2008, hit partly by its investment in Ssangyong Motor in Korea, which has filed for bankruptcy protection due to severe liquidity problems. Ford’s Chinese partner also announced a sharp profit fall but results were better at FAW Group.


Ssangyong, 51.33% owned by SAIC, posted four consecutive quarterly net losses as auto demand plunged amid a deepening global recession, forcing its Chinese shareholder to put aside “a significant amount of provision”, Reuters reported.


SAIC did not specify the size of provisions, but said earlier this month that exposure for its stake in Ssangyong was estimated at RMB1.85bn (US$270.5m) under Chinese accounting standards as of the end of November, the report said.


In a separate statement, Changan Auto said unaudited 2008 net profit was at roughly RMB38.93m, down from RMB666.89m a year earlier.


“Obviously a sharp slowdown of China’s car market played a big role in the weak earnings. Troubles with Ssangyong make life even harder for SAIC,” Zhang Xin, a senior industry analyst with Guotai Junan Securities, told Reuters.

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Volkswagen partner SAIC sold 1.72m vehicles in 2008compared with 1.69m in 2007 when sales rose 25.8% year on year.


Sales at the venture with Ford fell 5.9% this year after a 60% jump in 2007, Reuters noted.


FAW Group said on Friday its 2008 net profit rose 90 to 120% to RMB1.05bn-1.20bn, boosted by expanded sales and production.


Analysts reportedly attributed the earnings jump to brisk demand for its self-developed mid-sized Besturn sedans and Mazda 6 models, which are competitively priced against rival brands.


“FAW Car’s performance is not surprising at all. It could still hold out much better than most of its peers this year due to the popularity of Besturn and Mazda 6,” said a Tianxiang Consulting analyst told the news agency.


Reuters noted that FAW Car had said last year it planned to invest RMB2.36bn yuan to boost its internally developed car brands, adding 200,000 units of annual capacity for its own-brand cars by 2012, up from 120,000.