While (usually foreign) analysts are dead worried about the Chinese car bubble to pop and never to be seen again, Chinese car companies are happily raking it in. Western companies, mortgaged to the hilt, or on government life support, are developing a serious case of China-envy.
SAIC, China’s biggest automaker that has joint ventures with market leaders Volkswagen and GM, along with homegrown brands, more than quadrupled its first-quarter net profit, says Reuters. Reason given? SAIC “is a major beneficiary of Beijing’s stimulus measures, including tax incentives for small cars.” Now didn’t we hear that these tax incentives are not what they used to be? Chinese are unimpressed and continue to buy.
“At the beginning of the year, many people expected car sales to slow after breakneck growth in 2009, but there is no sign the momentum is losing steam,” said Zhang Xin, a Beijing-based analyst with Guotai Junan Securities.
Up North, the Q1 results of SAIC’s competition FAW didn’t quite quadruple, but their net profit jumped 182 percent year on year in the first quarter of the year, says China Knowledge.
Reason given for their good luck? “Strong vehicle sales.” Now that’s a good, no BS reason.