BIZCHINA / Top Biz News
New moves to steer car sector stability
By Gong Zhengzheng (China Daily)
Updated: 2006-05-31 08:48
China will introduce measures to trim overcapacity in auto sector and
promote local brands, an industry regulator said yesterday.
Sources from the National Development and Reform Commission said annual
sales for all carmakers in China must reach four-fifths of their
manufacturing capacity if they want to build plants in other cities.
And all new vehicle companies will be required to produce Chinese brand
vehicles, sources said.
If existing carmakers intend to invest in products of different
categories from their current offerings, these should include home-grown
brands.
Asked whether Sino-foreign car ventures would make local-brand vehicles,
an official from the commission said: "Why not?"
The official said these new measures would supplement a national auto
industry policy launched last June.
According to the policy, the total investment of any new vehicle project
in China should amount to at least 2 billion yuan (US$250 million) and
there should be no less than 500 million yuan (US$62 million) spending on
research and development.
There has been excessive auto production capacity in China as a result of
rapid investment in the sector in recent years.
According to statistics from the commission, current vehicle
manufacturing capacity stands at 8 million units a year.
An extra 8-million-unit capacity will be built within the next five
years, according to plans revealed by vehicle producers.
But sales of domestically-made automobiles totalled just 5.76 million
units last year, up 13.5 per cent from 2004.
The overcapacity has brought down car prices and eroded the sector's
profits considerably.
Last year, sector profits dropped by 24.3 per cent to 52.6 billion yuan
(US$6.1 billion).
"These new measures represent a warning to carmakers in China," said
Matthew Li, a Beijing-based analyst with industry consultancy Automotive
Resources Asia Ltd.
"However, conditions are different for different carmakers. Most global
automakers, such as Toyota, Hyundai and Ford, lack capacity to meet
growing demand in China.
"While the capacity for many less competitive players lies idle," Li told
China Daily.
Kenneth Hsu, vice-president of Ford Motor China, said the US carmaker was
concerned about overcapacity, but added that his own company could not
build cars fast enough.
"We must build more manufacturing capacity in China as our sales are
growing rapidly," Hsu said.
Ford and partner Chang'an Motor have lifted annual capacity at their
joint venture, based in Southwest China's Chongqing Municipality, to
200,000 units this year from 150,000 last year.
The two parties are also building a new 160,000-units plant in Jiangsu
Province in the east.
Hsu said sales of Ford's venture with Chang'an rose by 147 per cent to
more than 27,000 cars in the first quarter of this year.
But he declined to comment on the government's new requirements about
home-grown brands.
Some foreign automakers have expressed their intention to allow their
Chinese joint ventures to produce local-brand vehicles.
Volkswagen said last year that it would help its two car ventures with
First Automotive Works Corp and Shanghai Automotive Industry Corp develop
local-brand cars if they wanted to do so.
Hyundai's joint venture with Beijing Automotive Industry Corp said
earlier this year that the venture would launch a Chinese-brand car in
2008.
However, Li said it would be difficult to push Sino-foreign joint
ventures into building local-brand cars as the measure may affect foreign
automakers' own-brand sales.
(For more biz stories, please visit Industry Updates)
Most Popular Stories in 48 Hours
� Cities may alleviate housing woes
� Rural labor shortage beginning to be felt
� Xie Qihua: Made of Steel
� ICBC to open subsidiary in Moscow
� Good news in desertification control
Today's Top News
� Russia, China close ranks in Central Asia
� China emerging from shadows of AIDS
� Court hears last appeal for fugitive Lai
� Taiwan's 'security report' hurts peace
� Yangtze river 'cancerous' with pollution
Top Biz News
� Carrefour keeps pace with expansion
� In real-estate market, small now beautiful
� New moves to steer car sector stability
� Water consumption for per unit of GDP to drop 30%
� China, Japan start forum on energy saving cooperation
Alibaba is the largest B2B marketplace in the world. Source model ship,
wooden puzzle, one-piece toilet, RC hovercraft, photo album, prom dress,
pocket bike, Vaginal Speculum, Samurai Sword, String Panty and PVC Pipe.
Chinese School
No comments:
Post a Comment