Shanghai, March 26 (Gasgoo.com) GAC Changfeng Motor, former Hunan Changfeng Motor, recently released its profit forecast for 2009, estimating a 50% decrease in net profits last year from net profits of 140 million yuan ($20.5 million) in 2008, Search-Autoparts.com said.
GAC Changfeng Motor said the decline was mainly due to increased expenditures on promotion and advertising activities as a result of the launch of its new product Liebao CS7. In addition, the sales volume of more profitable products dropped, resulting in a lower gross profit margin.
The SUV-maker's profitability was also dragged down by the low utilization of its capacity. The company expects to produce and sell 46,000 SUVs in 2010, well below its production capacity of 50,000 units each for the Liebao and Pajero series.
Last year, Changfeng sold only 30,800 SUVs, an increase of less than 15%, much below the national average and as a result the carmaker's market share in China's SUV market shrank. Up to 658,800 SUVs were sold in China in 2009, up 47.2%.
Guangzhou Automobile Group (GAC) last year bought a 29% stake in Changfeng Motor. Changfeng's Japanese partner Mitsubishi Motors still holds 14.59% stake in the GAC-controlled company, continuing the technology transfer contract.
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