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Beijing, Dec. 27 (PTI): China has announced measures to prevent the development of excessive production capacity in the country’s auto industry, already the world’s second largest in terms of volume.

Announcing this, the National Development and Reform Commission, China’s top industry watchdog, yesterday said if an auto maker wants to build a new plant in another location, its sales in the previous year must account for more than 80 per cent of its existing production capacity approved by the government.

It said evidence is emerging of excessive auto production capacity in China, adding that the situation is likely to worsen.

While the industry has a current annual production capacity of eight million vehicles, facilities capable of producing a further 2.2 million vehicles a year are currently under construction, China Daily reported.

The commission warned that China’s total auto production capacity would exceed market demand if auto makers proceed with their plans to construct new production facilities in the years to 2010.

Sales of locally made vehicles are widely expected to exceed seven million units this year and reach 10 million in 2010, up from 5.7 million last year.
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