SHANGHAI, March 27 China's biggest automaker
SAIC Motor Corp forecast revenue growth would halve
in 2014 from last year to about 8 percent and warned a recovery
in the industry remained fragile due to overcapacity and
SAIC, which owns ventures with Volkswagen AG and
General Motors Co, said it aimed to generate 609 billion
yuan ($98.08 billion) in revenue this year, against 563 billion
yuan last year.
"In the next few years, China's auto industry will continue
to suffer from overcapacity, fierce price competition and rising
labour and other costs," SAIC said in a statement via the
Shanghai Stock Exchange.
China's vehicle market, the world's biggest, slumped to
near-zero growth between 2011 and 2012 as government sales
incentives introduced during the global financial crisis
expired. A recovery in the domestic economy helped sales rise
13.9 percent last year; they are expected to grow 8-10 percent
in 2014, says the China Association of Automobile Manufacturers.
But SAIC warned the market was still unsteady.
"The company may face challenges posed by fluctuations in
the macro-economy, the market, as well as changes in policies,"
it said, referring to an increasing number of cities imposing
car sales restrictions in an escalating battle against
SAIC posted a 19.5 percent rise in net profit to 24.8
billion yuan ($3.99 billion), helped by robust sales at its
ventures with Volkswagen and General Motors. Analysts polled by
Reuters had forecast a net profit of 23.25 billion yuan.
It said it sold 5.1 million vehicles last year, up 13.7
percent year on year, bolstered by a 21.7 percent sales rise at
its venture with Volkswagen and a 15.5 percent increase at its
car making venture with GM. It aims to sell 5.6 million vehicles
SAIC has been funnelling cash generated from its joint
ventures, which accounted for over 90 percent of total vehicle
sales by volume in 2013, into developing its own brands,
including Roewe and Morris Garages (MG).
The Roewe brand was developed based on technology from MG
Rover while the MG brand was indirectly purchased from the
now-bankrupt British carmaker.
SAIC's new energy car business was given a boost last month
after the Roewe E50 electric car was granted access to the
Beijing and Tianjin markets. Buyers of Roewe 550 plug-in
electric vehicles in Shanghai became eligible for free car
plates as well as subsidies worth 60,000 yuan. However, revenue
from electric cars will be likely remain negligible for now.
($1 = 6.2094 Chinese Yuan)
(Reporting by Samuel Shen and Kazunori Takada; Editing by