China Slams the Brakes on Automakers 中国为汽车行业踩刹车
A slightly ominous memo from the National Development Reform Commission (NDRC), China’s state planner, indicates Beijing plans to slam the brakes on approvals for major new auto-making investments, a much needed development for the overheated industry that could end up driving many smaller players out of business. The memo, detailed in a media report (English article), says China will strive for “healthy development” of the auto industry, with a focus on nurturing new industries — words that point to a sharp slowdown in approvals for major new projects except perhaps in the new energy arena. That should come as welcome news for an industry that has seen billions of dollars in new investment announced over the last 2 years, mostly by joint ventures between big foreign automakers and their Chinese partners. (previous post) After seeing turbo-charged growth in 2009 and 2010 due largely to economic incentives from Beijing, China auto sales have slowed to almost a halt this year as most of those incentives expired and the government turned its focus from stimulating the economy to cooling it down instead. Chinese vehicle grew just 2.6 percent in the first 11 months of this year, a major slowdown from the 32 percent growth rate last year and even higher growth in 2009, as China overtook the US to become the world’s biggest car market. Major new investment plans announced by the likes of Volkswagen’s (Frankfurt: VOWG) Audi, Ford (NYSE: F) and BMW (Frankfurt: BMW) for their China joint ventures were all undoubtedly planned during the boom times of 2009 and 2010, and the market is likely to become seriously oversupplied as they start to produce over the next 2 years, putting pressure on everyone, especially small- to mid-sized domestic manufacturers without major overseas partners. Such domestic companies, like BYD (HKEx: 1211; Shenzhen: 002594), Geely (HKEx: 165) and Chery, are already showing signs of stress with sales growth well behind that of their better-connected rivals, and that trend could accelerate as the new capacity comes on stream. In terms of new investment, look for a trickle of new energy auto initiatives to be announced and approved in 2012, most of them largely insignificant. In the meantime, watch for growth of the mainstream auto market to stay in the low single digits next year, with many smaller players slipping into the red — perhaps permanently.
Bottom line: Smaller automakers without big foreign partners are likely to slip into the red next year as growth slows, with Beijing unlikely to approve any major new investments.
Related postings 相关文章:
◙ China Autos Set for Long Slowdown
◙ Chery, Luxury Cars Hit New Speed Bumps
◙ Foreign Spending Spree Augers Woes for China Car Makers 外国车企大举投资中国 本土车企倍感压力
