FAW turns to loss as Besturn flops

FAW Car Co, the subsidiary of Chinese automaker FAW Group Corp, reported a loss of 61.42 million yuan ($9.67 million) in the first half of 2012 compared to a profit of 804 million yuan during the same period of last year, according to the company's fiscal report released late Tuesday.

Due to the intense competition in the auto industry, the automaker cut its sales prices in an unsuccessful bid to boost sales volume, leading to losses, said the company.

Experts said that joint venture brands occupy a majority of the market share in China, making it difficult for self-owned brands to perform well.

Facing competition from joint venture brands, the self-owned Besturn Series of FAW failed to achieve intended sales, accounting for the majority of losses of the automaker, Fu Zhiyong, an auto consultant at Beijing-based Adfaith Management Consulting, told the Global Times Wednesday.

"The sales volume of the joint venture brands has recorded double-digit monthly growth on average this year," said Fu.

However, sales of self-owned brands reduced 16.9 percent month-on-month to 191,100 units in July, accounting for 24.31 percent of the total car sales in China, hitting a new low since 2008, according to data released by the China Association of Automobile Manufacturers on August 10.

The self-owned brands are now confronted with huge difficulties, Cui Dayong, deputy general manager of FAW Car Sales Ltd, told the China Business News Wednesday.

"In order to cope with the fierce competition from the joint venture brands, FAW Car Co should recruit an overseas research and development team in order to enhance the quality of its vehicles," Guo Xingwang, an automobile marketing expert, told the Global Times Wednesday.

In a statement posted on the Shenzhen Stock Exchange on August 21, the company said that Changchun, capital of Northeast China's Jilin Province, would issue favorable policies to boost sales of Besturn Series, including subsidies to local Changchun residents to buy the brand, but experts doubt these favorable policies will help FAW increase its sales in the future.