China's vehicle industry enjoyed an excellent first five months of the year, with sales increasing nearly 30 per cent and profits up more than 70 per cent but rising inventories and threats of a price war bode for a leaner second half, according to official figures published yesterday.
The State Development and Reform Commission said the industry posted profits of 28.4 billion yuan, the best five-month result in three years and a 70.8 per cent improvement over the year-ago period.
Vehicle sales rose 30.6 per cent to 3.26 million, including 1.67 million cars, a rise of 60.1 per cent.
The commission said that the rise in profits was due to an easing of the price wars of the past two years. Sales of commercial vehicles also continued to recover and costs of raw materials, especially steel and petroleum, decreased.
But the second half will not be as good as the first. One reason is inventories which reached 100,360 vehicles at the end of last month from 68,633 at the end of last year.
Worst hit was Shenlong Auto, which had 14,827 vehicles in stock at the end of last month, followed by Dongfeng Nissan with 11,173 and First Auto Works with 11,083.