China's auto industries reaped overall profits of 36.77 billion yuan (US$4.6 billion) in the first six months of the year, an increase of 59.58 percent over the same period last year, according to the China Association of Automobile Manufacturers (CAAM).
Automobile manufacturers saw profits jump the highest, 76.56 percent higher than the same period a year ago, to reach 17.14 billion yuan (US$2.14 billion).
Profits in vehicle refitting, motorcycle making, engine production and auto parts were up 65.56 percent, 60.66 percent, 59.34 percent and 41.08 percent, respectively.
The CAAM said the new consumption tax which came into effect in April and raised the tax of high-emission vehicles, while cutting them on low-emission vehicles helped sales of small cars.
Other factors in the profit growth include a slump in steel prices and the government's promotion of environment-friendly, low-emission cars.
"Due to sales increase, profit in the automobile industry is growing by a large margin," said Wang Zhihui, analyst of the Shenyin Wanguo Securities company, adding that China sold 3.53 million cars, up 26.71 percent over the same period last year, with the sales of sedans soaring 46.9 percent to 1.8 million.
No automaker has reported a loss since 2006. FAW-Volkswagen earned reported profits of 800 million yuan (US$100 million) and the Dongfeng Peugeot Citroen Automobile company made 200 million yuan (US$25 million) in the first six months of the year. FAW-Volkswagen lost 200 million yuan and Dongfeng Peugeot Citroen had losses of 600 million yuan in the same period last year.
Shanghai General Motors ranked first in the automobile industry with profits growing by 21 percent.
Beijing-Hyundai, which reported profit of 700 million yuan (US$87.5 million) in the first half of the year, is the only carmaker to have its profit grow at a rate lower than the same period last year.
The country's increasing car exports also contributed. China exported 125,500 thousand cars, up 86.6 percent over the same period last year. The value of exports was 1.26 billion yuan (US$157.5 million), up 115 percent, according to statistics of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.
However, analysts say the fast growth in profitability is likely to lose momentum as steel prices are expected to rise in the second half of the year.
Zhang Xiaoyu, deputy chairman of the China Machinery Industry Federation, predicted that overall profits of the automobile industry will reach 60 billion yuan (US$7.5 billion) in 2006, compared with 70 billion yuan in 2004.
(Xinhua News Agency August 10, 2006)