BEIJING SAIC Motor Corp Ltd (600104.SS), China's biggest automaker, reported a 4.1 percent rise in net profit for the first quarter, a period when a rollback of a government tax incentive slowed its sales growth.
The Shanghai-based automaker, which has joint ventures with Volkswagen AG (VOWG_p.DE) and General Motors Co (GM.N), in addition to making its own brands of vehicles, posted a net profit of 8.26 billion yuan ($145.03 million), according to a company statement on Friday.
Both VW and GM are strong in the small sedan segment that benefited from a tax cut on cars with engines of 1.6 litres or below and both recorded contracting sales in China for the first quarter after that policy was scaled back.
The purchase tax on those vehicles rose to 7.5 percent as of January 1 from 5 percent in 2016 when the government stepped in to stimulate demand. The tax will return to the normal 10 percent rate next year.
SAIC's revenue rose 6 percent to 196.3 billion yuan from a year earlier. Its vehicle sales rose 3 percent for the quarter.
In the same quarter of last year, SAIC had posted vehicle sales growth of 4.5 percent.
Overall sales in the Chinese auto market, the world's largest, rose 7 percent in the first quarter of 2017 compared to a year ago, according to the China Association of Automobile Manufacturers.
That outpaced CAAM's prediction that sales will rise just 5 percent this year, compared to 13.7 percent in 2016, with CAAM saying that economic and policy pressures remain.
Automakers with strong new offerings in the hot-selling sport-utility vehicle segment, such as Honda Motor Co Ltd (7267.T), have outperformed the overall market as sedan sales remain flat.
($1 = 6.8950 Chinese yuan renminbi)
(Reporting by Muyu Xu and Jake Spring; Editing by Randy Fabi and Muralikumar Anantharaman)