China's Government Worried About Unbridled Auto Industry Growth

Bertel Schmitt
by Bertel Schmitt

If you think China’s auto growth is scary, then you find yourself in rare agreement with China’s central government. China’s 30 (!) major (!) auto makers had a production capacity of 13.59m vehicles by the end of 2009. Chinese bought 13.64m units. This year, it will be much more. By July, Chinese had already made and Chinese had already bought more than 10m units, according to data released by China’s Ministry of Industry and Information Technology.

Chinese buy more than just cars. They have bought (well, leased) enough land, buildings and machinery in order to more than double car output by 2015. With the current expansion and investment plans exercised, China will have production capacity for a mind-blowing 31.24m units by the end of 2015. That according to Chen Bin, head of industrial coordination at the National Development and Reform Commission, the nation’s economic regulation agency.That’s more than six (!) times the U.S. production in 2009, and three times the U.S. auto production in the heydays of 2007. You are not the only one to get worried now. Even China’s NDRC thinks that might be a bit much.

The production capacity in place could exceed demand, a worried Chen said at the International Forum on Chinese Automobile Industry Development in Tianjin. Unchecked expansion of China’s auto industry must be “resolutely” stopped, said Chen Bin according to China’s state news agency Xinhua.

The comments weren’t as much directed at the automobile industry as they were at parts of the Chinese government. Encouraged by the industry healthy profits and economic benefits, local governments had been making “blind” efforts to open new factories and expand capacity, Chen said. Twenty-seven of the country’s 31 provinces, autonomous regions and municipalities have plants that are able to produce finished vehicles.

Chen is worried about excess capacity inviting vicious competition, and hurting profits. Bringing out the big guns, Chen warned that unchecked growth may even threaten sustainable development of China’s economy.

Unrealistic output quotas for auto makers, and preferential land and tax policies for car makers must stop, said Chen in the direction of provincial governments that cut those deals.

Mind you Chen is talking about going easy on adding more capacity on top of the 31.24m units, for which planning and building is already under way. Chen is most likely more worried of competition than of a lack of demand. Using a – for Chinese tastes – moderate annual growth rate of 20 percent, China could buy more than 40m cars in 2015.

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  • Dartman Dartman on Sep 05, 2010

    Wow!... China's like Mexico on a HGH/steroid bender. If Fox and Friends think a couple of million Mexicans are a problem, wait a few years when a couple hundred million Chinese say: "screw it...let's go to CaliTexaZona..

  • Djkenny Djkenny on Sep 06, 2010

    Such opportunity to do it right. What does China do? become a mini, over crowded, more polluted USA. Try trains, use your bikes, alternative energy... not roads jam packed with carbon emitting, stress inducing, fat body enabling cars. Not a sustainable plan and a sure fire way to create a massive collapse economically too boot. Short term thinking and gains. Sociopath Style.

  • ToolGuy CXXVIII comments?!?
  • ToolGuy I did truck things with my truck this past week, twenty-odd miles from home (farther than usual). Recall that the interior bed space of my (modified) truck is 98" x 74". On the ride home yesterday the bed carried a 20 foot extension ladder (10 feet long, flagged 14 inches past the rear bumper), two other ladders, a smallish air compressor, a largish shop vac, three large bins, some materials, some scrap, and a slew of tool cases/bags. It was pretty full, is what I'm saying.The range of the Cybertruck would have been just fine. Nothing I carried had any substantial weight to it, in truck terms. The frunk would have been extremely useful (lock the tool cases there, out of the way of the Bed Stuff, away from prying eyes and grasping fingers -- you say I can charge my cordless tools there? bonus). Stainless steel plus no paint is a plus.Apparently the Cybertruck bed will be 78" long (but over 96" with the tailgate folded down) and 60-65" wide. And then Tesla promises "100 cubic feet of exterior, lockable storage — including the under-bed, frunk and sail pillars." Underbed storage requires the bed to be clear of other stuff, but bottom line everything would have fit, especially when we consider the second row of seats (tools and some materials out of the weather).Some days I was hauling mostly air on one leg of the trip. There were several store runs involved, some for 8-foot stock. One day I bummed a ride in a Roush Mustang. Three separate times other drivers tried to run into my truck (stainless steel panels, yes please). The fuel savings would be large enough for me to notice and to care.TL;DR: This truck would work for me, as a truck. Sample size = 1.
  • Art Vandelay Dodge should bring this back. They could sell it as the classic classic classic model
  • Surferjoe Still have a 2013 RDX, naturally aspirated V6, just can't get behind a 4 banger turbo.Also gloriously absent, ESS, lane departure warnings, etc.
  • ToolGuy Is it a genuine Top Hand? Oh, I forgot, I don't care. 🙂