Chinese passenger carmakers saw their profits plunge by 78.4 percent in the first two months of this year from the same period a year earlier, according to data reported by domestic media.

Although rising prices for raw materials, especially steel, raised production costs, the biggest factor sapping profits was falling prices ---- car prices dropped an average of about 12 percent last year, the Shanghai Daily reported.

China is the world's fastest-growing auto market as rising incomes make it possible for millions to buy their first cars. Foreign automakers are investing billions of dollars in expanding production in China to meet booming demand.

But demand has plateaued in recent months. Vehicle sales are forecast to rise about 10 percent this year, compared with a 75 percent growth in passenger car sales in 2003 and 15 percent last year.

Figures for 34 major car manufacturers showed only 11 reporting increased profits since the year's start, the National Statistics Bureau reported Monday.

Thirteen automakers posted losses in the first two months of the year, while 10 saw profits decline, the statistics bureau said.

Combined profits for carmakers and auto parts suppliers fell 61.5 percent in January-February compared with the same period a year earlier, it said. The decline for passenger cars was 78.4 percent.

The statistics bureau did not provide details for specific automakers.

Production in January-February totaled 329,300 vehicles, down 1.5 percent from the first two months of 2004, it said.

(Shenzhen Daily March 31, 2005)