Profit Drops at China’s Top SUV Maker as Market Gloom Continues

(Bloomberg) -- Great Wall Motor Co., China’s biggest maker of sport utility vehicles, reported a 59% drop in first-half profit after offering discounts and boosting development spending to cope with historic gloom in the world’s largest car market.

• Net income fell to 1.52 billion yuan ($213 million) in the six months through June, with revenue falling 16% to 40.3 billion yuan, the company said in a filing on Monday.
• That’s slightly lower than the 1.53 billion yuan in first half net income the company said it expected to report in a statement on July 19, but higher than the average of three analyst estimates compiled by Bloomberg of 1.32 billion yuan.

Key Insights

• Great Wall and local peers have been offering incentives to fend off global rivals amid the most severe demand slump in a generation. Local carmakers’ market share fell by almost 4 percentage points in the first half to 39.5%, while Japanese and German car brands gained 3.7 percentage points and 2.2 percentage points, respectively, according to China Association of Automobile Manufacturers.
• Sales of Great Wall’s high-end WEY brand fell 40% in the first half as foreign carmakers won over buyers. The high-end drop is hurting Great Wall’s margins, Lin Zhixuan, an analyst at Huatai Financial Holdings, said in a note ahead of the report.
• Among the top six local carmakers making Chinese-brand vehicles, Great Wall was the only one boosting total unit sales in the first half. Total delivery to dealers rose by 4.7% to 494,000 units, according to China Association of Automobile Manufacturers.

--With assistance from April Ma.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Ville Heiskanen

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