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SCMP Reporter

ANKOR Group, the locally-listed Saab dealership, has reported a loss of $46.29 million for 1994, hit by new taxes and consumer malaise.

  The loss compared with 1993 profits of $103.35 million and was blamed on uncertainty in local car markets due to the introduction of a revised system of new registration tax.

  A total of 81 per cent of the losses came as Ankor tried to build sales of its new Opel franchise in a declining market.

  Turnover was down by 24 per cent in 1994 compared with 1993.

   The loss per share was 5.9 cents and a final dividend of one cent a share declared.

  Ankor chairman Christer Agell said: 'Sales of Opel and Saab cars in Hong Kong were far below expectations and were affected by the uncertainty which emerged prior to the introduction of the new system of first registration tax on August 1 1994.'   He said competition in lower and middle-price segments continued to be intense on the back of contracting demand since the tax was unveiled.

 The tax system on new cars was changed last year to plug loopholes and extract more tax from the lower end of the car market.

   The tax is based on the retail price of cars.

    Mr Agell said that turnover in the group's most established brand, Saab, plummeted 39.7 per cent while margins fell substantially.

   'The combined effect of these negative factors meant a reduction in pre-tax profit of $95.8 million against the previous year,' he said.

  The firm's Opel division started operation in the second half of 1993, shortly before listing.

  'The introduction of any new car brand in the market requires long-term commitment and involves typically the establishment up front of sales, after sales and administrative support infrastructure before the product can be launched successfully,' Mr Agell said.

  The Opel franchise operated on a 'low sales base' during the year with 363 cars being sold.

   This was 'insufficient to cover the significant investment, representing staff and additional showroom, office and workshop operating expenses to the successful launch of the Opel brand in the market'.

  He said the major part of the costs was recurring so they were charged against revenue as incurred.

   He said that launching Opel was responsible for 81 per cent of Ankor's $45.66 million operating loss.

   Mr Agell said sales in China continued to rise despite China's tight fiscal policies. 'The sale of left-hand drive Saab cars to dealers and end-users in China increased by 111.4 per cent to 148 units from 70 units last year,' he said.

   Ankor now has four showrooms and four service centres in Guangdong.

   After participating in the Beijing motor show in June, a new dealer has been appointed for Beijing and Tianjin.

  A workshop and showroom had been established in Beijing.

  Ankor's Iveco truck division had been a success.

   'In only its third year of operation, Iveco has become the best selling European truck in Hong Kong in the 10 tonne and over categories,' he said.

  'Sales of commercial vehicles registered a 69 per cent increase over the previous year to 181 units.'   The market share of the Hong Kong truck and tractor market increased from 2.7 per cent to 4.6 per cent, Mr Agell said but warned shareholders there were more tough times ahead.

  'The market is likely to show a further downturn this year from the peak in new car registrations experienced in 1992 and 1993,' he said.

  There were factors which could help Ankor: 'From April 1, 1995, more stringent emission standards were introduced in Hong Kong which will mostly affect the commercial vehicle sector.

  'While many European makers have already been producing vehicles which comply for some time, Japanese vehicles being imported to Hong Kong will require new engines or costly modifications.

  Mr Agell said that Ankor had won a US$21 million, 1,170 car order for Saab vehicles and spares for the International Women's Conference to be held in Beijing in August.



Profit crash due to tax measures, says Saab dealer