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McClelland, a senior analyst in the automotive industry at Merrill Lynch, said that the Chinese auto industry is beginning a U-shaped reversal and that its profit margin will steadily rise from the bottom of 5% last year.
McCuihua suggested that the Chinese automobile industry pay attention to the localization of parts and components in order to increase profitability. She said that in 2005 China's auto industry's average profit margin was 4.5% to 5%, which was the lowest in history. However, this year's figures show that the auto industry is going through a trough and a considerable part of the company's profit rate will rise to 10%.
She believes that although Chinese enterprises have obvious advantages in labor costs, the current labor cost ratio is only 5% of the total cost of automobiles. Due to the weak self-development ability, especially the production of components lags behind vehicle production, some key technologies and components need to be introduced, which will affect the cost control and profitability.
Mai Cuihua believes that in the encirclement of the international auto giants, Chinese national car companies have emerged in recent years and have performed dramatically.