Chinese Automobile Enterprises Overcapacity Looming

In 2009 the automotive market really hot and prosperity to the Chinese auto industry a shot in the arm. This year, including the FAW-Volkswagen, Dongfeng Nissan, Guangzhou Honda Automobile, Geely Automobile, Chang’an Automobile and a number of auto manufacturers, have begun a vigorous pace of expansion of production capacity. In Changchun Qi Bohui, the number of the responsible persons to reporters depicts the plans for the future.

“Geely has developed to the 2 million car sales in mid 2015, the planning, a total of five technology platforms, 15 product platform with the goal, from now to 2015 will have nearly 40 new models to market.” Zhejiang Geely Holding Group, said public relations director Yang Xueliang.

In the large auto show in Changchun FAW Group show can be called “home.” It is reported that in June this year, FAW-Volkswagen plant project settled in South China, Guangdong, South China Sea in 500 million euros investment in the construction of new factories into operation in 2013, capacity expansion from the initial 150,000 to 300,000.

The end of the previous 5, Guangzhou Automobile Honda announced to spend 930 million yuan for the Zengcheng plant expansion, new capacity to reach 120,000, the production model or concept of their own brands, Costa maps, is expected to be completed late 2011 , then the total capacity of Guangzhou Honda Automobile from the current 360,000 to 480,000 to upgrade.

According to statistics of China Association of Automobile Manufacturers, in the first half, China’s automobile production and sales to achieve and 9,016,100 8,927,300, an increase of 48.84% and 47.67%.

However, statistics also show that the first six months of this year growth rate of China’s automobile production and sales chain in the continuous drop in growth rate is declining year on year. In June, China produced 1.3906 million vehicles, lower than the previous 1.84%, up 20.43 percent; sales 1,412,100, lower than the previous 1.83%, up by 23.48%.

In this regard, a growing number of experts and the industry began to show concern: the massive expansion car enterprises will lead to overcapacity in the automobile industry crisis. School of Management, Jilin University, Baoshan, deputy secretary of GE, said the country is regarded almost all provinces in the automotive industry as one of the main development direction, aim high and go on in the country; the same time, the current view of China’s auto consumption market is very prosperous, but the prosperity sustainability, worth considering.

“The prosperity of the automotive market, from the demand perspective, with the current status of economic and social development of China-related; from a historical point of view, the sixties last century and the baby boom population. But cars are large durable goods, while China’s public transport system in rapid development, once the passion back to a rational consumer demand, will lead to overcapacity. “Ge Baoshan said.

“We believe China has a very broad market capacity, from Nissan’s products currently on the market layout, we are gradually to near the entry-level cars Ling Yu. As the economy develops, more and more Chinese consumers those who are will have their own cars. “Yan Hongbin said.

However, according to Zhejiang Automotive Network reports, including SAIC, FAW, Dongfeng and other 12 enterprises released by the mainstream vehicles, “12 5″ preliminary plan, a conservative estimate of its total output by 2015 will reach 32.5 million units, well above Blue Book of China’s auto industry 22 million forecast.

Meanwhile, Wu Xiaobo, vice president of Management, Zhejiang University, said China’s current lurking behind the booming auto industry overcapacity risks, the Government should be guided, more importantly, enterprises need to self-planning vehicles, to develop a rational manner consistent with the market economy not blindly follow the trend of the development of enterprise development strategies.

According to Xinhua, the world’s leading research company Nielsen released this month on the 7th of Chinese automobile users in 2010 to monitor consumer trends report showed that the intention of Chinese consumers become more rational car, only 32% of the respondents expressed interest in a car within a year, this proportion declined by 21% compared to last year’s.

“Once the phenomenon of massive excess capacity, such as Jilin, the automobile industry as the leading provinces will be in trouble, will trigger the issue involving the whole community, including family, financial and tax stability. Moreover, Chinese auto surplus production is no solution, no single market can accept such a large production capacity in China. “Ge Baoshan said.

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