Profit margins of Chinese auto industry shrink

Profit margins of Chinese auto industry shrink

The profits of Chinese auto industry fell 58.5% year on year to RMB 7.64 billion ($922.7 million) in the first quarter of 2005. This was the third quarter at a raw the profits declined. In details, the profits of the passenger car, truck and bus manufacturers decreased 75.4% year on year to RMB 2.9 billion ($350.2 million) during the quarter. The profits of auto parts manufacturers decreased 28.2% year on year to RMB 4.05 billion ($489.1 million). According to the industry players, the high competition in the market and high cost of steel are the main causes of the lower profits. The profit margins of car manufacturers was around 7% in 2004 and analysts expect it to regress below 6% in 2005.