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Auto industry profit rises 65.79% despite price cuts


  China's automobile industry experienced a 65.79 percent profit rise in the first half of this year, despite heated market competition and wide-ranging price cuts.

  Major domestic automakers reported a total profit of 30.21 billion Yuan (US$3.99 billion) in the first six months, an increase of 11.99 billion Yuan over the same period of last year, statistics from the China Association of Automobile Manufacturers show.

  The auto industry created 109.15 billion Yuan in industrial added value during the period, up 34.13 percent over the first half year of 2006, which far outpaced the average 18.50 percent for the country's industry as a whole.

  Among the 16 major automakers, 14 saw this year's core business revenue larger than that of the same period last year, except Hafei Automobile Group and Changhe Automobile Co., Ltd.

The top three automakers, First Automotive Works Corp (FAW), Shanghai Automotive Industry Corp (SAIC) and Dongfeng Motor Corp, all recorded revenues of more than 80 million Yuan in the first half, compared to a total of 486.38 billion Yuan for the left 16 firms.

  The three giants were followed by Guangzhou Automobile Group, Beijing Automobile Industry Corp, Changan Automobile Group, Brilliance China Automotive Holdings Ltd, China National Heavy Duty Truck Group Co (Sinotruk), Chery Automobile Co and Jianghuai Automobile Group.

  Although the ferocious price war has eaten into new model profits, almost all the major automakers witnessed substantial profit rises, from both domestic and joint-venture brands, said Guo Yong, market information director of the Beijing Asian Games Village Automobile Exchange, one of the barometers of the automobile industry.

  As for revenue, Guangzhou Auto, South East (Fujian) Motor Co, Chery and Brilliance all experienced rises of more than 50 percent, while others including Geely, Jianghuai, Changan and SAIC also saw increases.
Zhu Yiping, spokeswoman for the association, pointed to booming national economy as well as improved management, decreased expenditures, and faster revenue growth compared to costs for automakers as contributors to profit and revenue increases.

  In contrast to the uptrend in the industry, the profit of Geely, a private carmaker that had been growing rapidly, dropped for the first time, and that of Nanjing Automobile (Group) Corp and Hafei slumped 12.50 and 19.34 percent respectively due to sluggish sedan sales.

  In the first half, major automakers in China, except a few including FAW Toyota Motor Co and Guangzhou Honda Automobile Co, joined the price war to woo consumers.
Guo mainly attributed the rising profits to an economy of scale.


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