Nation’s car-making majors still dominate mainland auto market
Strong annual performances recorded by Guangzhou Automobile (net profit +71.5pc), SAIC (+7.5pc) and Dongfeng Motor (+5.4pc)
Three of China’s largest vehicle makers reported strong earnings growth for 2017 on Thursday, led by Guangzhou Automobile Group, with a whopping 71 per cent profit jump.
The rises recorded by the three listed firms – SAIC Motor, Guangzhou Automobile and Dongfeng Motor Group – show the country’s largest car makers are still bucking the trend of a slowing global auto market, and ratcheting up the pressure on their smaller domestic rivals.
China is the world’s largest auto market and saw vehicle sales accelerate 3 per cent last year, albeit compared with 13.7 per cent growth in 2016.
Its top 10 auto conglomerates account for by far the most purchases, 25.56 million units in 2017 or 88.5 per cent of the national total, 0.2 of a percentage point higher than in 2016.
“Market leaders, buoyed by their brand awareness and launches of new models, will continue to take the lion’s share of the market,” said Peter Chen, a Shanghai-based engineer with US auto component maker TRW.
“A lacklustre overall market isn’t expected to stop them from growing further.”
Guangzhou Automobile’s annual net profit came in at 10.8 billion yuan (US$1.71 billion), a 71.5 per cent surge, after it sold two million vehicles last year, a 21.7 per cent rise on 2016.
The company’s self-owned brands include Trumpchi, and sport-utility vehicle sales raced ahead 36.7 per cent to 508,600 units.
Shanghai-based SAIC, the mainland’s largest carmaker, posted net earnings of 34.4 billion yuan for the year, a 7.5 per cent annual rise.
Among its total sales of 6.93 million vehicles, the ingenious brands Roewe and MG turned out to be bright spots, with combined 523,000 units driven off the forecourts, a jump of 62.3 per cent over 2016.
Both Guangzhou Automobile and SAIC are listed in Shanghai.
While Hong Kong-listed, but Wuhan-based Dongfeng raked in net profit of 14 billion yuan in 2017, up 5.4 per cent from a year earlier, despite its passenger vehicle sales slipped 5.2 per cent to 520,800 units.
The three Chinese majors announcing on Thursday also have lucrative partnerships with global marques such as Volkswagen, General Motors, Honda and Toyota, to built foreign-branded cars.
Last week, Zhejiang Geely Holding Group, the owner of Volvo Cars and a shareholder of Daimler, revealed equally powerful figures.
Its Hong Kong-listed unit, Geely Automobile Holdings, the mainland’s largest non-state-owned carmaker, reported last week that its net profits for 2017 more than doubled to 10.63 billion yuan with sales expanding 63 per cent to 1.25 million units.
Beijing’s rollback of the government purchase tax on small cars last year, however, have taken a toll, denting sales of cars with 1.6-litre engines or lower.
The tax on smaller cars was raised to 7.5 per cent from 5 per cent in 2016, and it returns to its standard 10 per cent this year. As a result, smaller car sales lost 1.1 per cent to 17.19 million units in 2017.