Foreign carmakers take 70% profits from China's auto market

Shanghai September 27 (Gasgoo.com) It is undeniable that China is now the leader in the global automotive industry, but when it comes to profit, can we still hold our heads high saying that we are the real profit getter? Unfortunately, it is the foreign automakers who have the core automotive technology and are raking in enormous profits from us.

German automaker Volkswagen AG gained nearly half of its pretax profit from the Chinese market in the first quarter of this year; while Japan's Honda Motor Co. reported net profit of more than $2.86 billion in FY 2009, up about 90%, compared with $3.18 billion it obtained in the global auto market.

China overtook the United States to become the world's largest car and van market in 2009, with a total of 13.6 million vehicles sold in the domestic market. Such a good opportunity lying ahead, international auto giants, including Toyota, Volkswagen, General Motors, Nissan, Honda, Hyundai-Kia all shifted sales and headed for China. That same year, these automakers witnessed a growth of over 20% in sales in the country. 

In order to earn more profits, Volkswagen has decided to invest an extra 1.6 billion euros ($2.1 billion) in China. In the next three years, the automaker's total investment in the country will reach 6.0 billion euros.

More and more foreign automakers are now setting up their Asia Pacific headquarters in China. They generally occupy China's auto market with 40% capital investment, 50% market share and 70% profits an analyst said.

In terms of core technologies, no matter it is traditional vehicles or new energy vehicles, China still has a long way to go to reach the advanced world level, an industry insider said.

The weakness also includes vehicle technologies, such as the automatic transmission technology and automobile electronic technology, another insider said.