Chinese auto industry's gross profit margin down, cost up

BEIJING, May 29, 2008 (AsiaPulse via COMTEX) -- China's automotive industry saw its gross profit margin fall sharply in the first quarter of 2008, due to the appreciation of steel plate and other materials, China Securities Journal reported. Meanwhile, the listed units maintained upward momentum both in business revenue and net profit.

Statistics from market researcher Wind Info show that the 21 listed whole vehicle companies made up 74.932 billion yuan (US$10.791 billion) in business revenue in the period, up 24.2 per cent year on year; and 3.027 billion yuan in net profit, up 33 per cent. But without the 400-million-yuan revenue growth from investment, they only had their net profit up 15.78 per cent year on year.

Thus, the industry's gross profit margin reached 13.08 per cent in January-March, as against the 13.19 per cent in the year-ago.

By variety of products, the gross profit margin for passenger vehicle manufacturing was 13.37 per cent in the three months as against 13.42 per cent in the same period of 2007; that for commercial truck manufacturing dropped to 12.56 from 12.59 per cent; that for commercial passenger vehicle manufacturing went down to 12.57 per cent from 13.37 per cent; and that for special vehicle manufacturing grew from 25.38 per cent to 25.54 per cent. 231

Besides, China's heavy truck sales reached 82,000 units in April, up 52 per cent year on year, making the heavy truck sector post the fastest growth.

Li Mengtao, an analyst with Sinolink Securities, said the sales would grow over 15 per cent this year. If China loosens control credit and keeps the investment at a high level, the demands for heavy truck chassis will rebound, and the heavy truck will show even better performance in 2008 than expected.

Statistics show the commercial truck-manufacturing sector reported the lowest decrease in gross profit margin, indicating that it has better ability to pass the pressure from the appreciation of steel materials to customers, and China still has a great demand for heavy trucks.

Li predicted that the demand would further grow after the reconstruction is under way in the earthquake-hit area in Sichuan.