Recent reports from FAW Group and Beiqi Foton show large profit slumps in 2011.
Despite China's automarket performing reasonably well throughout 2011, domestic manufacturer's vehicle sales were less than ideal. In particular, Beiqi Foton and FAW Group were the worst affected, with profits slumping by 30% and 88% respectively.
Weak domestic demand and market saturation are two of the key factors to affect sales in FAW Group, China's oldest and largest automaker. In anticipation of booming sales, the company rushed to finish a new plant by the end of 2010, however weak demand saw many units left unsold, greatly reducing the company's profitability to just CYN217 million ($34.5 million) last year.
Beiqi Foton Motor Co, one of China's largest commercial vehicle manufacturers, said that slow sales had also dragged profitability down by 30%. Yearly profits decreased to CYN1.15 billion ($182.5 million with revenues shrinking 3.5% to CYN51.7 billion ($8.2 billion). Sales were also fell, 6.2% lower year-on-year to 640,000 vehicles in 2011, some 11% short of annual targets. Like many other automakers, Beiqi Foton was hampered by the cancellation of government purchasing incentives and a general economic slowdown. The company is “not upbeat” about 2012 sales, according to a recent media statement.