Chinese automakers’ profits down in January-February 2004 period
Chinese auto manufacturers' profits showed a rapid decrease in January-February 2004 period. Market analysts attribute this decline to high steel costs and falling car prices. China's thirteen state owned automakers reported Yuan 4.6 billion ($555 million) profit in the aforementioned period with a 13.4% decrease compared to the same period of last year. The decline in profit was a result of increasing core business costs for automakers because of red hot steel prices. Core business costs soared by 7% in January-February 2004 period when compared with the corresponding period of 2003. Global steel prices indicate an increase since last year due to strong demand and rising raw material costs like iron ore and coking coal. In addition, Chinese automakers are cutting their prices to attract customers. These reasons are affecting automakers' profit making capabilities. Moreover, under World Trade Organization (WTO) obligations, China will cut its tariffs on vehicle imports to 30% next year from 34.2-37.6% this year. According to China Association of Automobile Manufacturers, automakers' profits will show an upward trend with an expected sales increase in the coming months. China's new vehicle sales amounted to 734'300 units in January-February 2004 period, up by 24% compared to same period of last year. In 2003, automobile sales in China reached 2.04 million units due to economy which grew by 9.1% last year.