Changan's profits fall over 40% in first half of 2012

Gasgoo.com (Shanghai July 22) - A recent performance review from Changan Automobile reveals that the manufacturer's net profits have fallen over 40 percent in the first half of thi year, Shanghai Securities News reported. The drop occurred despite a decrease of only four percent in the Chongqing manufacturer's sales.

According to the review, Changan estimates its net profit for the first half of the year to be between 530 million yuan and 580 million yuan ($84.15m-$92.08m), representing a year-on-year decrease of 44.23 percent to 49.04 percent. Changan attributes the decline due to a fall in sales and decreasing amounts of revenue from its joint venture partnerships.

The manufacturer's sales this year totaled 886,800 units, 4.15 percent less than last year. What is worth noting, however, is that sales of own branded Changan vehicles decreased much more severely. After deducting sales from JVs with its domestic and foreign partners, including Ford and Mazda, Changan's sales during the six month period were only around 510,000 units, falling a full 11 percent from last year.

Outside analysts have their own opinions regarding Changan's performance. According to a research report from Orient Securities, Changan's performance over the first two quarters of the year exceeded their expectations. Subtracting government subsidies, the manufacturer's net profit in the first quarter totaled 146 million yuan ($23.18m), more than double the amount it earned a year ago. Other analyst groups have previously stated their low prospects for Changan, saying that its own brand models are far less than competitive than those of other companies. By purchasing Hafei and Changhe, the manufacturer eliminated two of its chief rivals in the microvan market. However, Changan has failed to see much return. Despite offering prices lower than rival SAIC-GM-Wuling, Changan has been unable to attract the same level of consumer demand.