China's Car Makers Are Raking It In

Bertel Schmitt
by Bertel Schmitt
china s car makers are raking it in

Expo-nential growth

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 Chin a Knowledge.

Reason given for their good luck? “Strong vehicle sales.” Now that’s a good, no BS reason.

Join the conversation
  • Paul Niedermeyer Paul Niedermeyer on Apr 30, 2010

    Si since they're 50/50 partners with GM, why isn't GM "raking it in" in China?

  • Bertel Schmitt Bertel Schmitt on Apr 30, 2010

    They do. 49% of the joint venture profits (not SAIC's profits) are theirs. Probably the only thing profitable in the world of GM ....

  • Dimwit Dimwit on Apr 30, 2010

    As I said in a previos post, the influence that the government has with the incentives, or lack of, and their buying preferences, is overstated. Yes it will affect the market but that market is already overheated. The effects will be minor. There's not much indication anybody cares except the media. The biggest fallout will be at the lowest levels, where marginal players are trying to compete with the JV majors. There has to be major consolidation soon. Right now it's too fractured with too many varieties of weird crap. Once this is curtailed then the large survivors will turn outward with competitive designs and manufacturing.

  • Mythicalprogrammer Mythicalprogrammer on May 01, 2010

    Pft it's not the car bubble pop that they should be worried about. It's their devalued yuan that can cause a economic bubble pop that they should be worrying about.