China's automobile industry in 2004 achieved a profit of 70 billion yuan, or 8.5 billion US dollars, according to the report issued by China Machinery Industry Federation.

But the profit growth rate dropped 8-percentage point compared to the figure of the previous year.

The automobile industry made a total production of over 1 trillion yuan, or 121 billion US dollars in 2004. This is an increase of 21 billion US dollars from the previous year. The total output amounted 5 million vehicles, up 15 percent from 2003.

The profits reached 8.5 billion US dollars, but the profit growth dropped 8-percentage point.

Experts say the profit reduction is attributed to two reasons. The price rise of raw material raised the production cost by 10 to 15 %. At the same time, the competition pushed the sales price down by 11 %.

Zhang Xiaoyu, Vice Chairman of China Machinery Industry Federation, said, "At the time when the raw material price went up but the automobile price down, our profit growth just dropped 8 percentage point. This is not easy."

Experts estimate that China's automobile industry will continue to grow in 2005 and production growth will maintain at 15 to 20 %. The automobiles produced will reach 5.6 to 5.8 million vehicles.

Source: China Daily