SHANGHAI -- Shanghai Automotive, which owns a fifth of General Motors' flagship car plant in China, posted a 23 percent fall in quarterly earnings as car sales braked across the country.
Shanghai Automotive Co. Ltd., the listed arm of China's top homegrown carmaker, posted earnings of $45.34 million in the third quarter, compared with 59 million a year earlier, it said in a statement published in the Shanghai Securities News over the weekend.
Revenues slipped 15 percent to $185 million in the quarter as the company encountered what it said was a myriad of difficulties in the stuttering car market this year.
"Sales growth of passenger cars slowed, competition and costs increased, and car parts prices fell," it said.
Car sales -- in what was the world's fastest-growing major market in 2003 -- have decelerated ever since Beijing slapped curbs on auto loans as part of efforts to slow the economy. From a doubling to 2 million cars in 2003, analysts now expect car sales to rise just 10 percent to 20 percent this year.
In September, car output fell 7.8 percent to 177,400 units, according to official data -- the first year-on-year fall in output since China joined the World Trade Organization in 2001.
A margin-slicing price war has also hammered profits: GM offered 11 percent discounts on its cars in May before rival Volkswagen AG countered by hacking prices by up to 11.7 percent in June.
Stiff competition could explain GM's fall in quarterly profit to $80 million vs. $132 million previously, and was also cited by analysts as a reason behind rival Changan Auto's 31.8 percent slide in earnings.
Changan, the mainland's top minivan maker, is Ford Motor Co.'s carmaking partner in China and also assembles compact cars with Japan's Suzuki Corp.
Shanghai Auto is the largest listed maker of car components in an industry peopled by smaller rivals such as Torch Investment Co. Ltd. Its stake in GM's venture has been known to account for more than 80 percent of overall net earnings.
It also benefits through its ties with its parent, one of a triumvirate that dominates the domestic sector.
That parent, Shanghai Automotive Industry Corp., plans to list as a group -- possibly overseas -- over the next few years as it gears up to become a global brand. No mention of the plan was made in the statement.