After the automotive industry regained profitability in 2005, it finally reached a new peak in the first half of this year. Recently, several major listed companies such as G-Shangqi, G-Jinlong, G-Sedan, G-Changan, and G-Jiangling announced their semi-annual results or preliminary profit reports. The net profits of these automotive companies showed a significant year-on-year increase, signaling a positive trend for the entire industry.
**Current Situation:**
**Significant Year-on-Year Performance Growth**
This year’s performance for automotive listed companies has seen a sharp rise. According to data from the previous quarter, the revenue of automotive firms grew by 25% year-on-year in the first quarter, while net profit increased by 9.67%. In the semi-annual reports of some companies, the growth trend continues. For example, SAIC Motors reported that its key financial indicators showed strong momentum, with net profit rising by 14.01% compared to the same period last year.
The recovery of the auto industry has also benefited companies involved in auto parts. Even though some automobile manufacturers have not yet released their full results, their performance is expected to show a similar upward trend.
**Analysis:**
**Strong Demand Drives Production and Sales**
The improved performance of listed companies reflects the full recovery of the automotive sector. According to the National Development and Reform Commission, production and sales of vehicles in the first half of the year saw a significant acceleration. Output rose by 27.8% year-on-year, while vehicle sales increased by 26.7%. Profit for the national automotive industry surged by 58.5%, reaching 35.8 billion yuan.
According to the companies that have released their reports, the growth in profits is driven by strong demand, leading to higher production and sales. G-SAIC stated that the main reason for the performance improvement is the better market environment. Dongfeng Nissan's sales department noted that the overall market remained relatively strong due to high consumer demand.
Factors such as reduced tariffs and the implementation of a new automobile consumption tax have led to lower car prices, encouraging more consumers to buy. Additionally, many companies adjusted their product mix and introduced new models, which helped boost profitability. The decline in steel prices since October last year also eased cost pressures on manufacturers.
**Prediction:**
**Car Prices Continue to Drop, Sales Remain Stable**
Will the growth momentum from the first half continue into the second half? Most analysts and industry insiders are optimistic. They believe that the auto market will remain strong in the coming months.
Industry experts predict that car prices may fall further in the second half of the year, but total sales should remain stable. According to the "China Automotive Industry Quarterly" report from the State Council's Development Research Center, the passenger vehicle market has shown clear growth, with car prices continuing to drop slightly since last year. It is expected that passenger vehicle sales will grow rapidly in the second half, although at a slightly slower pace, between 25% and 30%.
Haitong Securities’ latest report suggests that the car industry is still in a growth phase, with steady earnings. Due to long-term domestic demand for cars, the industry expects an average annual growth of 20% before 2011. Considering factors like falling profit margins and selling prices, the average growth rate of sedan profits over the next six years is expected to be between 3.18% and 10.07%.
**Some Auto Listed Companies' Interim Results:**
- G Jinlong: Revenue up 77.90%, net profit up 30.15%
- G SAIC: Revenue up 54.42%, net profit up 14.01%
- Ningbo Huaxiang: Revenue up 212.17%, net profit up 332.73%
- AVIC Precision Machinery: Revenue up 103.54%, net profit up 133.6%
- G Car: Net profit increase by 50%–100%
- G Changan: Net profit increase by 45%
- G Jiangling: Net profit increase by 60%
- FAW Xiali: Net profit increase by 200%
**Industry Views:**
Citic Securities analyst Li Chunbo believes that the growth rate in the second half will likely be lower than in the first half. He notes that rapid expansion of production capacity and fierce competition could lead to a decline in gross profit margins. Currently, the margin is still too high, and the industry should aim for a reasonable level slightly above that of developed countries.
Jia Xinguang, chief analyst at China Automotive Industry Consulting and Development Co., Ltd., states that China remains the world's largest automotive consumer market. Although sales dropped in May and June, the overall market is still healthy, and the positive trend will continue. With improved production capacity in the second half of the year, he is confident in the market’s future performance.
**July Total Sales:**
In July, a total of 280,000 cars were sold in China, representing a 12.3% decline from June’s 319,000 units. However, compared to the same period last year, the growth rate remains around 20%, showing a generally positive trend.
According to the latest statistics, FAW-Volkswagen topped the monthly sales chart with 29,501 units, followed by Shanghai General Motors with 24,445 units. Shanghai Shanghai Motors ranked third with 26,088 units, while Beijing Hyundai Motor sold 24,160 units, and FAW Toyota sold 19,262 units.
Although July sales dropped by 12.3% from June, the industry considers July to be the lowest point of the year for car sales. This decline is normal, and the situation is expected to improve starting in August as the off-season ends.
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