The National Bureau of Statistics has released a report predicting a strong rebound in vehicle industry profits during the fourth quarter of this year and the first quarter of next year. While auto companies have seen an overall increase in production since the start of the year, recent data indicates that the sector is finally turning a corner.
According to the latest report, car production and sales in the second half of the year have surged significantly compared to the first half, signaling a gradual recovery from a prolonged downturn. From January to November, the automotive industry's losses dropped from 43.6% in the first three quarters to 38.1%, with the average monthly loss for struggling enterprises falling by 41% in the last two months. This marks a clear shift in the situation for large-scale loss-making automakers.
The bureau expects a substantial profit growth in the coming quarters, driven largely by reduced losses and improved efficiency. However, despite this positive outlook, the current recovery remains modest when compared to previous cycles, such as those in 2003 and 2004.
In the first nine months of the year, China’s car production rose by 17.7% year-on-year, but corporate profits fell sharply by 52.9%. Among the 15 major car manufacturers, four reported revenue losses, eight saw declining profits, and only three experienced significant gains. For many automakers, survival remained the primary challenge.
However, the latest statistics show that by November, the auto industry had reached the bottom of its short-term cycle. Although profits were still down over 40% compared to the same period last year, the report suggests that the fourth quarter and early next year will bring a marked improvement. This recovery is expected to be fueled by cost-cutting measures and better inventory management.
November also saw a record high in car production, with the country manufacturing 291,900 units—nearly 300,000—representing a 52.1% increase compared to the same month in 2022. This figure surpassed the peak recorded in June, highlighting a strong end-of-year performance. From January to November, total car output reached 2,600,600 units, up 24.2% year-on-year.
Meanwhile, car sales continued to outpace production in November, driven by several factors: the launch of new models like the Toyota Reiz and Changan Fox, increased dealer distribution efforts by automakers at year-end, and strategic production cuts by major companies to reduce inventory. For example, Shanghai Volkswagen cut production by 35% in October and 21% in November, while both North and South Volkswagen saw their inventories drop by over 40,000 units from June to November.
These actions helped stabilize the market and ease inventory pressure across the industry. As the sector continues to adjust, the outlook for the next few quarters looks increasingly optimistic. (Yu Linglin)
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