Gasgoo.com (Shanghai August 26) - While listed automakers suffer profit slump in the depressed Chinese auto market this year, auto spare parts suppliers realize good fiscal performance in the same period.
In a 2015 interim report of earnings forecast of more than 50 parts companies, 39 of them have been forecast to usher in a net profit growth, accounting for more than 70% per cent.
China Association of Automobile Manufactures’ latest report shows that domestic auto production and sales in the first half of this year ended up with 12.095 million and 11.8503 million units, respectively, an increase of 2.6 percent and 1.4 percent. The growth rate dropped 6.96 percentage points and 6.93 percentage points compared with the same period of last year.
Many automakers reported forecasting deficit in the first half of the year, including FAW Car, ST Xiali, Brilliance China, JAC and Zhongtong Bus. In specific, ST Xiali foresees 500 million to 570 million yuan deficit in the first half of the year. Zhongtong Bus reported half net profit of 40.96 million to 51.2 million yuan, falling 80 to 75 percent on a year-on-year basis.
However, a send-tire auto parts supplier ZhejiangCentury HuatongGroup reported a net profit of H1 of 144 million yuan, 1.74 times of that of last year. Another supplier Shanghai Shenhua Holdings released forecasting net profit growth of 166% to 172%.
The reason behind the profit disparity in automakers and suppliers is the delayed influence of recession on suppliers because automakers will purchase auto parts in advance and put them in storage. The delayed period could last three to six months, which leaves enough time for suppliers to encounter the recession. Additionally, supplies have benefit a lot in the emerging e-commerce business.
