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June 27, 2003

HONG KONG: Brilliance China expects June fall in minibus sales – report

Brilliance China Automotive Holdings said on Friday that minibus sales in China probably fell in June as the SARS outbreak hit an already traditionally weak month, Dow Jones reported. The company reportedly said sales likely totalled around 5,500 units in June, which would be a decline from 5,700 minibuses in May and 5,900 units a year earlier. It would mark the second consecutive month that sales slipped, the report added.

By bcusack

Brilliance China Automotive Holdings said on Friday that minibus sales in China probably fell in June as the SARS outbreak hit an already traditionally weak month, Dow Jones reported.

The company reportedly said sales likely totalled around 5,500 units in June, which would be a decline from 5,700 minibuses in May and 5,900 units a year earlier. It would mark the second consecutive month that sales slipped, the report added.

“Seasonally, June is a weak month for sales,” Brilliance China Chairman Wu Xiaoan told Dow Jones after the China minibus maker’s annual general meeting. “And we’re affected by SARS.”

According to Dow Jones, the company also said it sold in June more than 2,500 mid-ranged Zhonghua sedans, up from 2,400 in May. The company launched a two-litre automatic version of the sedan in late May, the report noted, adding that the model was first launched in August.

According to Dow Jones, Wu said the company is sticking to its full-year sales target of 70,000 minibuses and more than 30,000 Zhonghua sedans, despite the sluggish minibus sales.

He reportedly said that, by the end of June, Brilliance China will have sold more than 35,000 minibuses and 15,000 Zhonghua sedans this year and added that the first-half performance “has already met the company’s half-year target”.

UBS analyst Henry Wu told Dow Jones that next month, however, will be crucial.

“The July sales performance will be a critical point to evaluate” if the company can keep meet its full-year target, the analyst reportedly said.

Executives told Dow Jones that the company sees no pressure to further cut prices of its vehicles after it lowered the price of the manual transmission versions of its mid-range sedans in late May in an effort to clear unsold stock.

Top executives at Brilliance China’s new single-largest shareholder, state-owned Huachen Automotive Group Holdings Co., attending the meeting said that Brilliance China has the full support of the government, according to the Dow Jones report.

“After all the restructuring work, I can tell you governments from the central to provincial levels will give full support to Brilliance China’s future development,” Huachen chairman Yang Bao Shan told the news agency.

Huachen is wholly owned by the Liaoning provincial government and bought a 39.45% stake in Brilliance China from the Chinese Financial Education Development Foundation early this year after Brilliance China’s former Chairman Yang Rong fled to the US after being accused of economic crimes, Dow Jones said.

According to the report, the takeover by the Liaoning government appeared to mark an end to investors’ frustration over the company’s complicated shareholding structure, which included a number of unlisted and A-share listed assets that were linked to Yang Rong.

According to Dow Jones, Yang Bao Shan also said the government of Shenyang city, the capital of Liaoning province, plans to keep its 5.45% stake in its sedan joint venture with BMW.

The news agency noted that, in late April, the Shenyang city government agreed to sell 4% of its original 9.5% holding in the venture to Brilliance China. The move lifted the minibus maker’s stake in the venture to 44.55% while BMW’s stake remained at 50%, Dow Jones added.

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