China's Largest Auto Maker Profits More than Double

Sold 3.58 million vehicles in 2010, up 31.5% from a year earlier

SAIC Motor, China's largest auto maker by sales, said net profit more than doubled in 2010 on robust sales growth but warned earnings would likely grow at a slower pace this year.

The company, which has joint ventures with General Motors and Volkswagen, posted a net profit of 13.73 billion yuan (US$$2.1 billion) last year, up from 6.59 billion in 2009.

Revenue jumped to 312.48 billion yuan, from 138.88 billion yuan in the previous year, the company said.

It sold 3.58 million vehicles last year, up 31.5% from a year earlier.

But SAIC said the strong growth would slow after the government ended most vehicle-buying incentives at the end of 2010 and took a number of steps to curb inflation in the world's second-largest economy. "As the government phased out a slew of policy incentives aimed to boost vehicle sales, the tone of the policy environment is turning neutral from pro-growth previously," it said.

It added that policy steps such as recent interest rate hikes were "tightening" the company's funding sources and may impact its distributors and consumer sentiment.

It expected revenue to rise to 347.1 billion yuan in 2011, up 11.1% from 2010, and foresaw sales of four million vehicles this year.

The pace of car sales in China, the world's biggest auto market, has slowed since mid-2010 as the government began withdrawing stimulus measures aimed at cushioning the impact of the global financial crisis.

The government has raised the purchase tax for small passenger cars to 10% starting this year, ending an incentive policy that helped the nation overtake the United States as the world's top auto market in 2009. Some cities, including Beijing, have also introduced measures such as annual quotas of new car number plates to restrict purchases as part of efforts to ease chronic gridlock and control air pollution.

Copyright Agence France-Presse, 2011

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