Changan Auto warns of big fall in '08 net profit

Shanghai, January 23 (Gasgoo.com) Chongqing Changan Auto Co. warned on today about a sharp drop in its 2008 net profit as a slowing economy curbs automobile demand, said sohu.com today.

Changan Auto, Ford Motor's China partner, said unaudited 2008 net profit was at roughly 38.93 million yuan ($5.7 million), down from 666.89 million yuan a year earlier. A sharp slowdown of China's car market played a big role in the weak earnings, said industry analysts. The auto market downturn is mainly attributed to raw material and energy price hikes by mid-2008 and to the global economic crisis in the second half. 

Changan Auto makes cars in a three way tie-up with Ford and Mazda Motor. It was hit badly as car sales at the joint venture fell by 20,000 vehicles, or 5.9 percent, this year, after a 60 percent jump in 2007. The sales of Changan Auto's own-brand vehicles dropped by 27,000 units last year from 2007.

Changan Auto's bigger peer, China's biggest automaker SAIC Motor, has also warned about a nosedive in last year's net profit. SAIC expects a 50 percent fall in unaudited net profit in 2008, hit in part by its investment in Korea's Ssangyong Motor, which has filed for bankruptcy protection due to severe liquidity problems.

However, not all auto manufacturers have been affected by the market downturn. FAW Car Co, a unit of one of China's three largest auto makers FAW Group, said on Friday its 2008 net profit rose 90 to 120 percent to 1.05 billion-1.20 billion yuan, boosted by expanded sales and production.