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China to see acute auto overcapacity by 2010
(Reuters)
Updated: 2005-11-14 17:13 China will produce twice as many vehicles as it
needs by 2010 if the current investment frenzy in the automotive sector goes
unchecked, a newspaper cited a top economic planner as saying on Monday.
Vehicle production in China is expected to hit 20 million units in 2010,
far outpacing anticipated sales of only 9 million units, Chen Bin, head of the
industry department of the National Development and Reform Commission, was
quoted as saying in the China Securities Journal.
Annual capacity, now at 8 million units, has already exceeded expected sales
of 5.5 million units this year, but investments have shown no signs of cooling,
Chen said.
Global auto makers such as Volkswagen , General Motors Corp. and Toyota Motor
Corp. are spending some $15 billion to triple annual capacity to more than 7
million cars by 2008, which has sparked fears of an impending glut.
However, car sales in China climbed a moderate 17.9 percent in the first 10
months. Growth had slowed to just 15 percent in 2004 after a near-doubling in
2003, as Beijing cracked down on easy auto loans.
Experts now expect the market to grow just 10-15 percent in 2005 as Beijing
keeps up credit curbs aimed at bringing about a soft landing of the world's
seventh-largest economy.
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