British media: China's auto industry is very profitable, just like printing money

British "Financial Times" June 11 article, original title: foreign car manufacturers extract Chinese cash cows

In the 1950s, the words of GM's president were misunderstood as: benefiting GM is beneficial to the United States. After 60 years, it is the Chinese market that is good for GM. In the first quarter of this year, its Chinese joint venture company's net income reached 595 million US dollars, while GM's net income in other global markets totaled only 100 million US dollars.

Over the years, China has become a very profitable market for US companies. China is also a cash cow for Volkswagen. Last year, Volkswagen grabbed the top spot in China. The Chinese market accounts for 31% of its global sales, its joint ventures operating profit of 9.6 billion euros, and Volkswagen's total operating profit worldwide is 11.7 billion euros.

In addition to fast-growing vehicle sales, multinational auto companies charge technology and brand royalties from joint ventures in China and make money by selling spare parts. Janet Lewis of Macquarie Securities in Hong Kong said: "It is very profitable to make cars in China, but no one wants to emphasize this. If you do it well enough in this market, it is like printing money."

Chinese auto consumers have surprised many analysts. They thought that the Chinese auto market would cool down after experiencing high-speed growth last year, but from January to May this year, the growth rate exceeded 11%. Macquarie Securities said that since 2010, the equipment usage rate of Sino-foreign joint venture automobile manufacturing plants has reached 100% or even higher, and the working hours per week are as long as 80 hours. This year, Shanghai GM and Changan Ford will increase the equipment usage rate to 120%. (Author Tom Mitchell, translated by Wang Xiaoxiong)