SHANGHAI -- SAIC Motor Corp. posted a 7.4 percent jump in 2016 profits, slightly lower than expected, and cautioned sales growth will slow this year as China rolls back a tax cut on small-engine cars.
The Shanghai-based automaker, which makes cars in joint ventures with General Motors and Volkswagen AG in addition to vehicles for its own brands, said net profit totaled 32.0 billion yuan ($4.6 billion) last year.
Revenue rose 13 percent to 756 billion yuan.
Last year, car sales in China received a boost as consumers rushed to buy vehicles before the sales tax increased on Jan. 1. The tax cut -- on vehicles with engines of 1.6 liters or smaller -- mainly helped the mass market, where Volkswagen excels.
But sales are expected to come under pressure this year following an increase in the sales tax on small-engine vehicles to 7.5 percent as of Jan. 1, from 5 percent in 2016. The tax will return to its normal level of 10 percent in 2018.
SAIC said the rush to buy cars before the hike in taxes could mean lower sales this year.
"After the blowout in (last year's) auto market sales, it will be difficult to avoid an 'overdraft,'" SAIC said in an exchange filing. "Market growth is facing greater challenges."
SAIC's vehicle sales rose 3 percent in the first three months of 2017. For the full year, the automaker aims to sell 6.7 million vehicles, up only 3.8 percent from 2016, when the company's deliveries rose 10 percent growth.
The growth in China's overall vehicle market is expected to slow to 5 percent in 2017 from 14 percent last year, according to the China Association of Automobile Manufacturers.
Amid a more challenging domestic market, SAIC plans to continue pursuing new markets overseas and said it had formally agreed to buy an Indian factory from General Motors. GM previously had said it was moving forward with talks to sell its Halol plant in India's western state of Gujarat to SAIC.
"We continue to progress toward the sale of the Halol plant, as we consolidate manufacturing at our Talegaon plant," GM told Reuters in an emailed statement, referring to a second India plant.