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According to the latest statistics from the China Association of Automobile Manufacturers, the total profit growth of the domestic automobile manufacturing industry from January to August this year was 63.87% year-on-year, much higher than the 29.87% main income growth rate. The industry believes that the recent drop in international oil prices, in addition to stimulating auto consumption, will also reduce auto manufacturing costs. Fitch Ratings predicts that the profit growth of the car industry will continue during the year.
However, some research institutions have also stressed that due to overcapacity and the recent upward adjustment of steel prices, the domestic auto industry is still unsatisfactory and the polarization between companies will intensify.
Profit growth exceeds 60%
According to the latest statistics from the China Association of Automobile Manufacturers, from January to August this year, the automotive manufacturing industry realized main business income of 486.02 billion yuan, a year-on-year increase of 29.87%. One noteworthy phenomenon is that the profit growth of the automotive industry is much higher than the income growth rate. According to statistics, the total profit of the automobile manufacturing industry from January to August reached 22.004 billion yuan, a year-on-year increase of 63.87%.
On the other hand, inventory growth in the automotive industry is lower than income growth. At the end of August, the inventory of finished goods inventory of the national auto industry was 82.695 billion yuan, an increase of 12.44% year-on-year, a decrease of 4.29 percentage points from the end of July. In the first 8 months, the accumulative sales-to-sales rate of enterprises above designated size in the national automotive industry was 97.40%, which was basically the same as that of the same period of last year. In the case of listed companies, the companies whose performance increased significantly year-on-year were mainly concentrated in the car sector. Changan Automobile (000625)'s net profit in the first three quarters increased by 146.32% year-on-year. The net profit of FAW Xiali (000927) for the first three quarters increased by 105.78% year-on-year.
Strong demand boost profitability
Since the beginning of this year, the increase in demand for cars in the market has been due to many factors.
According to industry insiders, prices in domestic big cities continue to rise, and some consumers tend to purchase homes far away from the city center, which in turn increases the demand for cars. With the continuous improvement of our country’s highway network, the update cycle of passenger cars for road passengers is gradually accelerating. Coupled with the demand for bus, export, and rural passenger transportation, the bus industry has also maintained a steady and sustained growth.
The export of China's commercial vehicle pull effect can not be ignored. According to the data, from January to August this year, the total number of trucks exported was 95,600, and the total foreign exchange earned through exports was US$603 million, an increase of 52.22% and 48.52% year-on-year respectively; the total number of passenger cars exported was 14,400, and the accumulated foreign exchange earned through exports was 296 million U.S. dollars. It increased by 85.35% and 120%.
Fitch Ratings believes that strong market demand has eased the pressure on auto prices, resulting in a substantial increase in profits and profitability of the Chinese auto industry and reversing the downward trend in profit margins since 2004. In addition, people in the industry pointed out that the price of steel products has started to decline since last year, and its positive effect on the profitability of auto companies is reflected in the middle period of 2006.
Reduced oil prices bring double benefits
In recent days, international oil prices have fallen by more than 20%. Jiang Xueqing of Changjiang Securities Research Institute said that if the domestic retail oil prices fall, it will stimulate auto consumption to some extent.
In addition to stimulating consumption, the reduction in oil prices is also conducive to the reduction of automobile manufacturing costs. The Changjiang Securities Research Institute has determined that in passenger vehicles, the proportion of tires in the cost is about 1-3%, and that of commercial vehicles is about 4-6%. If the price of oil falls, it will have little impact on the earnings of the listed companies of cars, but the impact on the earnings of heavy trucks and big passenger commercial vehicle companies will be relatively significant.
Jiang Xueqing said that if the drop in oil prices leads to a 2% drop in tire prices, the net profit of sedans may increase by about 0.7%, the net profit of passenger car companies may increase by about 1%, and the net profit of heavy truck companies may increase by 1.8%. about.
Differentiation increases agency caution
Because the recovery of steel prices this year and the problem of overcapacity of passenger vehicles have not been fundamentally alleviated and the polarization between companies has increased, most institutions are still cautious about the auto industry.
According to statistics, in the first 8 months of this year, FAW Group, CNHTC Group and Chang'an Group, whose profit growth rate is higher than the industry average, increased by 406.32%, 278.96% and 183.73%, respectively, and their revenue growth was 52.40% respectively. 47.59% and 47.44%. Although Dongfeng Group's main business income only increased by 4.30%, its total profit increased by 41.66% year-on-year.
However, not all companies can increase income and increase profits. According to the data from the China Association of Automobile Manufacturers, Gold Cup’s main business revenue increased by 55.84%, but it suffered losses in the first three quarters. JAC Group achieved a 12.57% increase in main business revenue, but total profit decreased by 12.32%. GAC Group’s main business revenue increased by 34.55%, but its profit growth rate was only 7.42%.
Some research institutions believe that although the large and medium bus industry will not exhibit explosive growth opportunities, it will maintain steady growth; the heavy truck industry will begin to bottom out; the profitability of the sedan industry will rebound, but it will be subject to overcapacity and price competition will be the most fierce. .