FAW Xiali suffers net deficit in Q1 while FAW Car finally reports earning a net profit

Gasgoo.com (Shanghai April 16) - FAW Group's two subsidiary companies, FAW Car and FAW Xiali, both reported suffering large decreases in sales growth last year, with the former suffering a deficit. However, the two companies' performances diverged in the first quarter this year, with FAW Car finally managing to pull in a profit, while Xiali reported a deficit.

According to a report appearing in the Shanghai Securities News today, FAW Car reported earning a total income of 23.38 billion yuan ($3.74b) last year, 28.38 percent less than its income in 2011. The manufacturer suffered a net deficit of 756 million yuan ($121.18m) last year. By comparison, it earned a net profit of 217 million yuan ($34.29m) in 2011. FAW Car attributed its poor performance to increasing production costs as well as falling prices and decreasing sales of its own brand models and those sold in cooperation with Japanese manufacturers. Likewise, FAW Xiali's total income and net profit both decreased 24.63 percent and 68.74 percent last year, respectively.

However, FAW Car made a return form in 2013, earning a net profit of 356 million yuan ($57.03m) in the first quarter of the year. Increasingly favorable market conditions, rising retail prices and decreasing auto part costs were cited as the two major factors behind the manufacturer's stronger performance over the quarter.

By comparison, FAW Xiali suffered a net deficit of 58.13 million yuan ($9.31m) in the first quarter. The manufacturer's quarterly income totaled 1.71 billion yuan ($273.78m), 16.97 percent than respective figures from a year ago. According to various reports, Xiali sold a total of 41,968 vehicles over the quarter, representing negative year-on-year growth of 27 percent. According to an announcement it made at the Shenzhen Stock Exchange, the manufacturer had decided to halt production of its Xiali A series, which in part affected its quarterly sales performance.