NDRC urges auto industry consolidation

China's nine ministries and commissions, including the National Development and Reform Commission, are brewing policies to promote the merging and restructuring of the country's automobile industry, China Securities Journal reported on Thursday.

The commission will require the elimination of failing businesses as a prerequisite to the approval of new projects. And the country will continue to strengthen its effort in technological transformation and to encourage enterprises to establish technical centers to eliminate out-of-date production capacity through mergers and acquisitions.

According to statistics from the Ministry of Industry and Information Technology, there are more than 1,300 manufacturers of various types of vehicles. Over the years, some companies have stopped production or been in a semi-shutdown state, yielding little or no output.

In 2009, the government issued a restructuring and revitalization plan for the auto industry, encouraging China's four biggest auto groups, including SAIC Motor and FAW Group to conduct national mergers and reorganizations.

The plan also encouraged second-tier auto companies, such as BAIC Motor and Guangzhou Automobile Group, to carry out regional mergers and reorganization.

However, China's auto industry is still caught in a situation in which the enterprises are generally small and dispersed. The new policies will speed up the pace of the industry's restructuring.

The policies for the restructuring of the auto industry is part of a more general restructuring project among eight key industries in China, namely iron and steel, cement, machinery manufacturing, electrolytic aluminum, rare earth, electronic information and medicines.

The nine ministries and commissions include the National Development and Reform Commission, the Ministry of Finance, the State-owned Assets Supervision and Administration Commission, and the Securities Regulatory Commission.