By on January 15, 2010

Drive time in Beijing. Picture courtesy chinadaily.com.cn

Did we say that the auto industry has to deal with severe capacity problems? China has capacity problems alright. It looks like the biggest impediment to further sales growth in China is a shortage of cars.

China’s car makers are running three shifts and still cannot keep up with the demand, Bloomberg reports. Nissan’s factory in central China is making cars almost 24 hours a day, yet customers are faced with three month waits for their new car. Other companies, such as Ford and Honda, are running their Chinese factories at full capacity, with overtime and weekend shifts, and still can’t deliver enough cars.

Nigel Harris, general manager of Ford’s venture with Changan, said that “based on our current growth rate and planning assumptions, the capacity of our two facilities will not be able to accommodate the expected future demand for our products.”

Auto makers are expanding Chinese assembly lines as fast as they can to deal with the expected 10 to 20 percent growth this year.

Refer to TTAC’s roundup of 2009 sales data for a continuously updated roundup of 2009 sales data from around the world.

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18 Comments on “China’s Car Makers Overwhelmed...”


  • avatar
    NulloModo

    Where the hell are the Chinese getting the money for all of these cars?  I realize that the explosion of business in China has made for some wealthy businessmen, but to my knowledge there is still a huge wealth disparity.  In fact, after some googling around, it seems as the current average annual income for someone in China is about $3,000.  Even with dramatically lower prices of vehicles in China, how are they affording these cars?

    • 0 avatar

      Take my friend Yi Jing for instance, who I met at  Fudan University.  She is a typical graduate making somewhere around $30,000US  a year.   The chinese cars don’t cost as much as the cars sold here in America so she can afford it, even though she doesn’t really want to buy one because mass transit is working for her.

      Right now, the biggest problem facing the Chinese is housing. their housing bubble was worse than ours. Picture spending $700,000US for a dinky apartment that at its best, doesn’t look as good as some of the apartments in our average apartments.   They don’t even have single family homes there anything like what we’ve got.

      The “average” income in China is dragged down by the mass of poor people in the rural areas living on $1 a day or less.   I’d say the people you see putting these cars on the road consistute the top 6% of the 1+ billion chinese.

  • avatar

    If you would follow the provided Bloomberg link, you would gain some insight ….

  • avatar
    Mr Carpenter

    Read “The Reckoning” some time and don’t look so much at the Ford chapters, but look at the Nissan chapters with an eye to what happened to Japan after World War II, through the 1960’s. 

    By the mid 1950’s, the average Japanese consumer could afford bicycles and perhaps a radio. 

    By the late 1950’s/early 1960’s the Japanese could afford a small motorcycle and perhaps a black & white TV. 

    By the mid 1960’s, the Japanese could afford a Kei car and perhaps a washing machine. 

    By the mid-late 1960’s, the Japanese could afford a Corolla and a color TV.

    You surely get the picture.  Same thing’s happening in China. 

    Except there’s one little salient difference:  China has about 1/3 of the world’s population (or is it 1/4th?)

  • avatar
    tced2

    Another case for “world cars” – some of that demand could be satisfied by plants elsewhere.  And that means work for people outside of China. Of course, the Chinese would have to agree to imports.
    (Here in Indiana, Honda is making Civics for markets other than the US).

  • avatar
    chitbox dodge

    If they would only lower their blocks to trade like we have with their products, maybe our own domestic manufacturers could get us our tax money back. But that isn’t how China works, and most likely never will.

  • avatar
    bmoredlj

    “Only” 13.64m cars were purchased in China last year. The population of “Consuming China” (as opposed to ultrapoor “Surviving China”) is nearing 200 million, if it isn’t already there.With all that burgeoning demand, the future looks very profitable indeed for any automaker operating in China. That said, the Chinese government will likely continue giving its homegrown companies a leg up while discouraging further intrusion of foreign firms, and if they successfully pull off a massive consolidation of myriad Chinese firms into a Big and Little 4, it will be even tougher. Particularly after their latest stand against alleged government hacking and censorship, Google’s chances of selling a car in China, for instance, have dwindled to virtually naught.

  • avatar
    Bunter1

    Perhaps the Gummit O’ the USA and the UAW should swap the remainder of GM to the Chinese for a chunk off our debt.

    They could build here, sell here and there, get instant capacity and open up a bunch of shuttered factories.

    Bunter

  • avatar
    ohsnapback

    China is absolutely awash in government/bank (the government owns the banking system) loans to consumers and businesses; it’s of a scale nearly incomprehensible.
     
    The Chinese government pulled out all the stops to ensure domestic consumption would rise dramatically to offset plunging exports in the wake of the financial crisis. The longer the central government orders banks to ply consumers with cash so that they can maintain this firewall against their battered exporters…
    China is the biggest bubble the world has ever seen, dwarfing any tulip, housing, dot.com, or housing bubbles of the past.
    Wait, listen and hear the giant crashing sound. It’ll happen sooner rather than later.

    • 0 avatar
      srogers

      Yet the common rumour is that the Chinese are more likely to purchase with cash. I don’t have a clue either way, but which is it?
       

    • 0 avatar

      It’s no rumor. It’s a fact. In China, most cars are bought with cash. Financed cars are in the minority (20% in 2008,) and trending DOWN. The alleged plying of consumers with cash is a myth. Just because the US car and real estate bubble was driven by easy credit, it doesn’t have to be the same in China.

  • avatar
    blowfish

    The Housing in Middle Kingdom can be a real thorny issue for now and time to come.
    Hope is not going to crash too soon.  Guandong Motors can get sucked into the Vortex too.

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