China Watch : SAIC Motor goes back into the black in Q4

Automotive News Europe/Reuters, 1st April, 2010

SAIC back in profit...
SAIC back in profit...

SHANGHAI (Reuters) — SAIC Motor Corp., China’s biggest automaker, returned to profit in the fourth quarter as policy incentives bolstered automobile demand in the world’s fastest growing major auto market.

SAIC, which runs vehicle manufacturing ventures with General Motors Co. and Volkswagen AG, is a major beneficiary of Beijing’s policy support, which had helped push its auto sales to record levels.

Analysts are unbeat about SAIC’s outlook for 2010 due in part to its newly gained status as the majority owner in its formerly 50-50 car venture with GM.

The deal, approved by regulators recently, allows the Chinese automaker to consolidate all the net profit made at the venture onto its balance sheet, instead of 50 percent previously.

For the full-year, net profit jumped to 6.59 billion yuan, beating an average forecast of 6.17 billion yuan from 7 analysts polled by Thomson Reuters I/B/E/S. The automaker itself had in January projected a more than 900 percent jump in its 2009 earnings.

“From the start of 2010, SAIC vehicle sales maintained its growth momentum, along with the continued launch of new models,” the automaker said in a statement on Thursday.

SAIC earned 2.62 billion yuan during the October-December quarter, according to Reuters calculations, compared with a net loss of 1.57 billion yuan a year earlier.

For the full-year, net profit jumped to 6.59 billion yuan, beating an average forecast of 6.17 billion yuan from 7 analysts polled by Thomson Reuters I/B/E/S. The automaker itself had in January projected a more than 900 percent jump in its 2009 earnings.

Shares in SAIC rose 3.1 percent on Thursday ahead of the results. They fell about 19 percent in the first quarter, underperforming the Shanghai Composite Index, which lost around 5 percent.

Solid sales ahead

China, which overtook the United States as the world’s biggest auto market last year, has been a major bright spot amid a global industry downturn thanks to Beijing’s stimulus measures, including aggressive cuts in sales tax for small cars.

SAIC sold 2.73 million vehicles in 2009, up 57.2 percent, with its market share in China rising 1.4 percentage points to 19.9 percent. Sales of its two foreign partners, GM and Volkswagen, also hit records.

It aims to sell more than 3 million vehicles in 2010, with turnover this year expected to reach 245 billion yuan, up from 139.6 billion yuan in 2009. In the first quarter, SAIC said its vehicle sales exceeded 890,000 units, up more than 60 percent from a year earlier.

The Shanghai-based automaker aims to sell 3 million vehicles this year, its Chairman Hu Maoyuan has said, in line with slower but still healthy 10 percent growth of the overall market.

It will be another good year for SAIC. The market remains solid and, as a controling shareholder, it can now consolidate all Shanghai GM’s earnings to its own books.” Zhang Xin, an Analyst with Guotai Junan Securities.

“It will be another good year for SAIC. The market remains solid and, as a controling shareholder, it can now consolidate all Shanghai GM’s earnings to its own books,” said Zhang Xin, an analyst with Guotai Junan Securities.

SAIC is among a growing number of Chinese automakers, including Zhejiang Geely Holding, which signed a deal over the weekend to take over Ford Motor Co.’s Volvo car unit — hoping to make their name globally.

It became the owner of MG Rover’s 10,000-unit Longbridge plant in Birmingham, central England after a merger with its much smaller peer Nanjing Automobile Group in late 2007.

The automaker, which rolled out its first-self made sedan, Roewe 750, based on acquired technologies in March 2007, is now virtually the only Chinese automaker that has made in-roads in the lucrative medium-to-higher end segment, still dominated by foreign brands.

[Source: Automotive News Europe]

Clive Goldthorp

1 Comment

  1. It’s funny that the gorgeous girls in the picture are in perfect focus whilst the tired lightly warmed over 75 they are helping sell is kept out of focus.

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