29-12-2006 The
National Development and Reform Commission, China's top industry watchdog, yesterday
issued measures to prevent the development of excessive production capacity in
the country's auto industry.
If an automaker operating in China wants
to build a new plant in another location, its sales in the previous year must
account for more than 80 % of its existing production capacity approved by the
government, the commission said.
It said evidence is emerging of excessive
auto production capacity in China, adding that the situation is likely to worsen.
While
the industry has a current annual production capacity of 8 million vehicles, facilities
capable of producing a further 2.2 million vehicles a year are currently under
construction.
The commission warned that China's total auto production
capacity will exceed market demand if automakers proceed with their plans to construct
new production facilities in the years to 2010,
Sales of domestically
made vehicles are widely expected to exceed 7 million units this year and reach
10 million units in 2010, up from 5.7 million units last year.
The commission
urged local governments to speed up trans-region consolidations between automakers
to create "big and internationally competitive" groups.
China's
auto sector, although ranking No 2 in the world in terms of production volume,
has more than 100 vehicle manufacturers.
Last year, the three biggest
Chinese groups First Automotive Works Corp, Shanghai Automotive Industry Corp
and Dongfeng Motor Corp controlled 46.1 % of the nation's total vehicle output,
down from 49.3 % in 2003.
The regulator urged local governments to support
the development of domestic automakers with their own brands, without revealing
what measures should be taken.
It said the government will launch specific
policies to aid the development of fuel-efficient and environmentally friendly
vehicles, especially those from home-grown brands.
The commission also
said government departments at all levels should buy such kinds of vehicles or
new-energy automobiles, especially those from Chinese brands, in order to "set
an example to ordinary customers."
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