China auto industry doules Q3's profit

The total data analysis from National Bureau of Statistics of China shows that the profits of the whole auto industry reach 33.2 billion in the third quarter (from June to August) in 2009, which are sorted out by Joint Advisory Committee of China Passenger Car Market. Comparing with the same period in 2008, the number increases 16.9 billion, and the growth rate is 104%, which has doubled the quarterly profit. The Chinese revitalizing the automotive industry's policy and measures have already achieved good results.

Cuo Dongshu has written, from the perspective of the comparison of the amounts of profit growth, the profit increase of the third quarter (from June to August) in 2009 is 16.95 billion. On the other hand, the profit of the second quarter (from March to May) has only increased 1.98 billion Yuan. The difference of profit growth between these two quarters is higher than eight times, which shows clear the gratifying situation of the automobile industry.

Previously, there are a lot of publicities about that automotive industry has increased the sales number, but not the profits. This kind of propagenda has already been denied by the reality. The above publicity began with the vicious comment from overseas, then followed by some domestic media, which are aiming at Chinese auto market. The reality proves, this comment is completely wrong, and the revitalizing the automotive industry's policy and measures in China have already made the positive achievements.

The main reason to achieve this high profit increase thanks to the strong sales in the automotive market, which has brought up the scale economics of the manufacturers and digged sufficiently the utilizing rate of capacity.

To view from the analysis about organizational structure's quality of the whole auto manufacturers, the two types of companies in automotive industry, joint ventures and stock companies, have better business. Their profit rates on costs are at a higher level, which particularly the profit rates on costs of joint ventures of passenger cars only drops little, while the traditional state-owned enterprises have poor efficiencies.

The gross profit of companies in third quarter has grown by a big margin. Especially, the joint ventures has a better performances. The income of joint ventures has an growth rate of 43%, which drives the gross profit increasing 58%. The gross margin of domestic capital companies improve the most, which has increased from 4.4 billion in 2008 to 7.8 billion in 2009.

This rapid growth is mainly because the the sale incomes increase faster than the costs, which shows the scale effect. In particular, the income growth of stock companies is 5% faster than cost increase, which also led the gross profit's growth of stock companies the fastest growth.

The investment income jumps up to an other level. The mercantile rate of return in automotive industry has a higher growth. Especially, the rate of return of investment of joint ventures of passenger cars reaches the level of 12% in the quarter. If converting into an annual rate of return on common stockholders' equity, it is nearly 50%, which is in very good condition. The mercantile rates of return of stock companies are also at a high level. This also brings up the exciting good news about quoted companies' performances.

The market trend of automotive industry in 2009 is very good.Particularly, the operating expenses of whole car companies rise faster. With the growth of sales, there is also a simultaneous increase of sales costs, which indicates the promotion efforts haven't been reduced. The rapid increase of the administration's cost reflects the fast growth of wages and other expenses, and the expenses for overtime and others in order to excavate further productivity have obious increased too. At present, the companies of narrow sense passenger cars use many measures in order to quickly fill the market demand, which mainly are to increase production shifts, and to solve bottlenecks link. Such measures have brought the economies of scale into a reality.

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