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back to index backASIAtalk February,  2006

Beijing To Order Long Awaited Crackdown on Minor Players in Auto Industry

The Shanghai Daily said last week that the Chinese government has finally ordered a long-awaited crackdown on the raft of minor players in the auto industry, but while the Xinhua news agency picked up the report, no other Chinese media outlet carried it.

The paper said the National Development and Reform Committee ordered 124 small makers of cars, trucks and motorcycles to cease production no later than Feb. 10, unless they can present convincing reasons why they should be allowed to continue operating.

They're forbidden to make parts or other automotive products, as well as to continue assembling vehicles.

Reduce Production

Another 20 makers were told to reduce production, the paper said. It gave no indication how that was supposed to help them prosper. The order, which the Shanghai Daily said had been posted,” though it didn't say where, revokes unused vehicle identification numbers assigned to the companies in question, and forbids them from being sold or passed on to other makers.

The NDRC's objective, the paper said, is to better allocate manufacturing resources and rein in excess capacity.” The paper said Jia Xinguang, identified as chief analyst of the China National Automotive Industry Consulting and Development Corp., observed that to avoid wasting auto resources, it is necessary to shut down these small plants.”

Demand, R&D Lacking

The NDRC move, he said, targets mainly makers that can't maintain production or sustain market demand, and who don't have enough R&D capability to support future development.” The paper asserted, without saying where its statistics originated, that China now has 6,222 auto related vehicle manufacturers,” and is producing 2 million more vehicles than the market demands.” There is no visible sign of anything like that, however, in the national industrial production statistics.

Source: Japan Automotive Digest - GAI

For more information on The Japan Automotive Digest, click here.

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