A Chinese credit ratings agency has downgraded Brilliance China from stable to negative. Xinhua Far East China Ratings says the move reflects its negative view of Brilliance china’s competitiveness as an independent domestic brand in the tougher Chinese sedan market and its falling market position in the minibus sector.

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It also incorporates concerns about the Company’s slow market responsiveness and its battered image among consumers resulting from a turbulent turnover of management, which has undermined its market share and profitability.


Xinhua Far East notes that Brilliance China’s sedan sales have slipped despite solid growth rates in China’s sedan market of 15.2% in 2004 and 24.3% in 2005. As market growth decelerates, CBA will face further squeezes with more players entering the business sedan submarket, its major revenue source in the past. Brilliance China’s weak R&D capability prevents it from not only launching new models to catch up with major rivals, but also from quickly expanding its product lines to faster-growing niches like economic or mini-sedans.


Moreover, the minibus sector, another core business for the company, has also been reporting disappointing results. Brilliance China’s share in the domestic minibus market fell from 24.2% in 2000 to 15.5% in 2004. The turnover and profit margin of the minibus sector (including auto parts) has slid also, largely due to lower prices and its condensed high-end product mix.


The agency does not have a negative view of Brilliance China’s joint venture with BMW, which launched the 3-series in Q2 2005.

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