Stimulated by policy slower profits of commercial vehicle companies have shrunk dramatically

“If trucks sell, they might as well sell pork.” In the background of rising raw materials in early 2008, the head of a commercial vehicle company’s joke about the market was exaggerated, but under the influence of the subsequent financial crisis, the implementation of the National III regulations and other factors. It is true that the commercial vehicle market has become the laggard of the auto market. At present, this market is stimulating slowly by policies and is still affected by economic fluctuations. The “money” scene is still not optimistic.

Status: Jianghuai, Futian, and Dongfeng rush to “divide”

The slump in sales has led to a decline in profits. Jianghuai Automobile had the deepest dive, achieving a net profit of RMB 6,088.3 million for the year, down 81.80% year-on-year. In 2008, JAC achieved sales of 108,074 light trucks, a year-on-year decrease of 9.94%; bus chassis was 21,442, a year-on-year decrease of 20.59%. The reason for the sharp drop in Jianghuai’s profits is also the huge investment in developing projects such as the sedan market. This reflects the pain of the transformation of traditional commercial vehicle companies.

In 2008, Foton Motor sold a total of 409,000 vehicles, a year-on-year increase of 1.90%, which is lower than the industry's average growth rate of 6.70%. In 2008, the company’s operating income was 30 billion yuan, an increase of 7.90% year-on-year; net profit attributable to shareholders of listed companies was 346 million yuan, a year-on-year decrease of 10.93%. Fukuda encountered a vicious circle of “increasing revenue without increasing profits”, and operating income increased by 7.91 percentage points. However, due to the increase in sales gross profit and expenses, operating profit dropped by 65.14 percentage points.

According to the annual report of Dongfeng Motor, in 2008, the company realized operating income of 12.431 billion yuan, a year-on-year increase of 14.80%; and a net profit of 315 million yuan, a year-on-year decrease of 34.14%. However, from the perspective of products, the decrease in operating profit of Dongfeng Motor mainly came from SUVs, which was a decrease of 16.68% year-on-year. From a regional point of view, the negative growth in operating income in South China shows that it has been hit by the financial crisis.

The profit growth of Jiangling Motors was attributable to the listed company’s net profit of 784 million yuan, a year-on-year increase of 3.31%. However, the company’s secretary-general stated that it was able to sustain such performance thanks to national policy support. Last year, the company received government support funds of RMB 160 million, accounting for nearly one-fifth of the net profit of RMB 780 million, if such subsidies were deducted. Compared with 2007, net profit of 770 million declined.

Forecast: Domestic investment is not optimistic

The companies believe that in 2008, the auto industry experienced a series of factors such as the snow disaster at the beginning of the year, implementation of the National III regulations, appreciation of the renminbi, sharp fluctuations in raw material prices, and the international financial crisis, which led to a decline in sales and profits. In 2009, as the overall economic situation is still difficult to improve, commercial vehicle sales are not optimistic.

Foton Motor believes that the impact of the financial crisis in 2009 on the domestic market will further expand. The country has accelerated the construction of railway infrastructure and has a certain negative impact on highway logistics. The Yangtze River Delta and Pearl River Delta, the main sales regions for the company's new products such as Parker and landscape, have been affected by the global financial crisis. A large number of small and medium-sized enterprises have closed down, leading to a reduction in consumer demand. At the same time, the company's technological innovation and new product development investment, will affect the company's profit in 2009 to a certain extent.

Dongfeng Motor believes that the current investment of 4 trillion yuan in domestic investment in the commercial vehicle market in 2009 is still not blindly optimistic. Starting from July 1, 3.5 tons of download vehicles began to implement the National III emission standards, and the emission standards increased, which promoted the upgrading of China's commercial vehicles, resulting in higher production costs of commercial vehicles, the price will be greatly increased, and the profitability will be lower. The truck industry will have an impact.

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