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Overcapacity Cost Increased Export Confusion
Recently, the National Information Center released the Green Paper of the 2007 China and World Economic Development Report. The Green Paper believes that in 2007 and for a long time to come, China will maintain strong demand for automobiles, but overcapacity, rising costs, chaotic export order, and overall decline in profits will continue to plague the automobile industry.
According to the analysis of the Green Paper, the first headache for the Chinese auto industry is still excess capacity. In 2005, China’s auto industry had a surplus capacity of 2 million vehicles, and 2.2 million vehicles were under construction. The new capacity of brewing and planning was 8 million vehicles. Some local governments are enthusiastic about the automotive industry and are driving green light on the capital flowing into auto manufacturing. This makes the automobile industry crowded. The facts that support this assertion include: In 2006, almost all auto companies joined the price war, while the stock volume was increasing. In June, July, and August, they reached 115,000, 137,000, and 14.9 respectively. Ten thousand vehicles, an increase of 118% compared to the beginning of 2006. Therefore, the Green Paper believes that if the government and the capital still ignore this situation and continue to encourage and enter the industry, the collapse of enterprises, unemployment of employees, bank bad debts and financial risks will be inevitable.
Another problem that plagues cars is the chaotic order of car exports. In addition, the export of automotive products of low grade, homogeneity tends to be serious, mainly in trucks and other commercial vehicles, the proportion of cars is less than 20% and models mainly in the middle and low. When manufacturing costs rise, the low-cost advantages of China's autos will gradually be lost. In addition, the low-price strategy will also hurt the international brand image of Chinese cars because some companies cannot guarantee product quality and after-sales service after selling at low prices.
According to the Green Paper, although profit from automobile manufacturing has increased significantly since the same period of last year, it was realized in 2005 when the profit base was extremely low, and it showed unsustainable characteristics. Because the contradiction between the supply and demand of the auto industry is not alleviated but intensified in the future, the production capacity that has been bred for many years will inevitably pull the entire industry into a more profitable space. There is no sign of a substantial drop in the rise in raw materials in the future. Despite all the troubles, the good prospects of the Chinese auto industry are still beyond doubt. The Green Paper predicts that automobile production and sales will continue to grow in 2007. The market demand is expected to exceed 8 million vehicles, which will increase by 18% from 2006; and the output will exceed 9 million vehicles, which will increase by 20% from 2006. the above.
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