Gasgoo.com (Shanghai January 28) - Guangzhou Automobile Group has released its preliminary fiscal performance review for last year this week, China Business News reported today. According to the review, GAC Group expects its net profits for the year to be 70 percent to 80 percent lower than they were in 2011.
In 2011, GAC reported earning 4.27 billion yuan ($679.75m) in net profit. The manufacturer expects its net profits this year to be between 850 million yuan and 1.28 billion yuan ($135.26m-$203.69m). The manufacturer attributes the drop in net profits to the poor performance of its Japanese joint ventures, the relatively immaturity of its newly established subsidiary enterprises, increasing market competition and the popularization of policies restricting automobile sales in cities such as Guangzhou.
GAC's net profit in the third quarter of 2012 totaled just 357 million yuan ($56.81m), a full 58.36 percent lower than it was a year ago. That figure is suspected to have decreased even lower over the following quarter, when sales of Japanese brand vehicles in China reached a new low. Both key joint ventures Guangqi Honda and Guangqi Toyota suffered sharp sales declines in 2012, with the former reporting a sales drop of 12.7 percent from 2011 to 2012. Furthermore, the Guangqi Fiat and Guangqi Mitsubishi JVs have only recently begun operation, and have yet to begin making profits, while own brands Trumpchi, Changfeng and Gonow still only constitute a small part of the manufacturer's overall operations.
However, several analysts expects GAC's fortunes to turn around this year as sales of Japanese vehicles continue to recover and its other JVs become more profitable.
