China's Car Makers Overwhelmed

Bertel Schmitt
by Bertel Schmitt

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.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Philadlj Philadlj on Jan 15, 2010

    "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.

  • Bunter1 Bunter1 on Jan 15, 2010

    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

    • CyCarConsulting CyCarConsulting on Jan 15, 2010

      News flash: The people of Detroit don't want foreign builders in their city, if you can believe that. I was shocked when I found that out.

  • Ohsnapback Ohsnapback on Jan 15, 2010

    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.

    • See 1 previous
    • Bertel Schmitt Bertel Schmitt on Jan 16, 2010

      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.

  • Blowfish Blowfish on Jan 15, 2010

    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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