Comparison of Asset-liability Ratio of Listed Vehicle Companies in China

As a measure of the level of corporate debt, asset-liability ratio should be more appropriate within a certain range. This may have different answers in different industries, but it is generally considered that it is appropriate to be around 60%. How much is it appropriate for the automotive industry? According to the announcement of Geely Group, the asset-liability ratio of large European and American car companies is generally between 70% and 80%, and the asset-liability ratios of the major auto groups such as Volkswagen, BMW, Daimler, PSA Peugeot Citroën and General Motors are listed as follows: 75%, 78%, 72%, 79%, and 73%. According to Gasgoo.com’s data on 25 listed companies in China (see the table below), the average asset-liability ratio of listed Chinese automakers in 2010 was 61.8%, which was basically the same as the average level of the previous year (61.7%).

From the perspective of different types of enterprises, the asset-liability ratio of most commercial vehicle companies in China is higher than that of the main passenger vehicle business.

The asset-liability ratios of the three commercial vehicle enterprises of China National Heavy Duty Truck Group, Golden Dragon Motors and Yaxing Passenger Cars were all above 70% in 2010, which were 79.7%, 75.9% and 72.3% respectively. The asset-liability ratio of Foton Motors and Shuguang Co., Ltd. also exceeded 70% in 2009, but it dropped to 67.3% and 67.8% in 2010 respectively.

The asset-liability ratio of Jinbei Auto’s main light trucks business is the highest among these 25 listed companies. In 2010, its total liabilities and total assets were 4.466 billion yuan and 4.925 billion yuan, respectively, and the asset-liability ratio was as high as 90.7%, but it was the same as last year. Compared with (97.0%), it has decreased.

Among the major passenger vehicle listed companies, SAIC Motor’s asset-liability ratio is relatively high, reaching 64.3% in 2010, but it is also lower than that of the above-mentioned main commercial vehicle business. The asset-liability ratios of Geely Auto, BYD, GAC Changfeng, and FAW Xiali were between 60% and 63% in 2010, which were 62.6%, 60.7%, 60.7% and 60.0% respectively.

The asset-liability ratios of Great Wall Motors, Lifan, FAW Car, and GAC Group in 2010 were all between 49% and 58%, which were 56.2%, 53.0%, 50.3%, and 49.7%, respectively.

Haima's asset-liability ratio in 2010 was the lowest among the 25 listed companies, only 37.4%. Jiangling Motors, which has a relatively high net interest rate among listed companies, has a relatively low debt-to-asset ratio, which was only 40.4% in 2009, but rose to 44.4% in 2010.

Note:

Asset-liability ratio refers to the ratio of the total liabilities of the company at the end of the year to the total assets. It shows how much of the company’s total assets are raised through liabilities. This indicator is a comprehensive indicator of the company’s debt level. At the same time, it is also an indicator to measure the ability of a company to use creditor funds to conduct business activities, and it also reflects the degree of security for creditors to issue loans.