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Report: China to 'force' car company mergers, hopes to consolidate market

4001 Views 2 Replies 3 Participants Last post by  green car driver
From Autocar.

The Chinese government is expected to reveal plans to encourage mergers and acquisitions between China’s car makers later this year, in a bid to create fewer, stronger companies and accelerate the sector’s already booming growth.

The Chinese Ministry of Industry and Information Technology is reported to be drawing up guidelines that will prohibit car makers from building new plants unless they acquire an existing manufacturer first.

At present, there are 130 car makers in China, the majority with annual sales of below 10,000 units. The Chinese government has previously stated that it wants to have two or three car makers with production capacities of two million units or more by 2012, and four to five companies with output of more than one million cars.

Only five car makers had sales of more than one million cars last year. The country’s top 10 car makers made

11.89 million cars, accounting for 87 per cent of all sales.

The restructuring is part of the government’s plan for 20 per cent of Chinese car makers’ sales to be exported by 2015. China’s car exports fell 45.7 per cent last year, to 369,600 units, but have shown a sharp rise again this year.
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We've been hearing this government cry for consolidation for years now, but despite some pressure, Beijing has maintained a hands off policy with regards to the little guys. Otherwise Zhongxing, Xinkai, Xunchi, Jonway, Dadi, Jincheng and others would be long gone.
It seems that for as long as the market stays up, these little guys, with their protective local government backing, will still keep on trucking.
The government should not mess with its auto industry. If it makes good business sense, I'm sure there will be mergers, but as long as chinese car manufacturers keep on growing all by themselves, everything's fine.
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