The National Bureau of Statistics has forecasted a significant rebound in vehicle industry profits during the fourth quarter of this year and the first quarter of next year. This marks a positive shift after a challenging period for automakers, where production growth had not translated into improved profitability.
Since the start of the year, auto companies have experienced a general rise in production, but recent data from the National Bureau reveals that this trend is about to change. The report highlights that car production and sales in the second half of 2024 have surged compared to the first half, signaling a gradual recovery for the sector. From January to November, the industry’s losses decreased from 43.6% in the first three quarters to 38.1%, showing signs of improvement. Additionally, the monthly average loss of loss-making enterprises fell by 41% in the last two months, indicating that large-scale losses are beginning to ease.
Looking back, the first nine months of the year saw a 17.7% increase in car production year-on-year, yet corporate profits dropped sharply by 52.9%. Out of the 15 major car manufacturers, four reported losses in sales revenue, eight saw profit declines, and only three experienced significant profit growth. For many automakers, survival was the main concern.
However, the latest report released on the 23rd suggests that although profits for the auto industry still declined by over 40% in the first 11 months of the year, the sector has likely reached the bottom of its short-term cycle. The National Bureau expects a substantial increase in profits during the fourth quarter and the first quarter of 2025, driven mainly by reduced losses and improved performance from previously struggling companies. Still, this recovery remains lower than previous cycles like those in 2003 and 2004.
In November, national car production hit a record high, with 291,900 units produced—nearly 300,000—representing a 52.1% increase compared to the same month the previous year. This marked the highest level since June, five months earlier. From January to November, total production reached 2,600,600 units, up 24.2% compared to the same period last year.
Meanwhile, car sales continued to outpace production in November, fueled by several factors: the launch of new models such as the Toyota Reiz and Changan Fox, increased efforts by automakers to clear dealer inventories before year-end, and proactive production cuts by some major companies, which led to a sharp decline in inventory levels. For example, Shanghai Volkswagen reduced production by 35% in October and 21% in November, while both North and South Volkswagen saw their new inventory drop to just 7,000 units by the end of November—an overall decrease of more than 40,000 vehicles from the end of June.
These measures helped stabilize the market and ease inventory pressures across the industry. As the sector continues to adjust, the outlook for the coming quarters appears increasingly optimistic. (Yu Linglin)
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