English.chinabuses.com: China's auto industry has shown signs of overcapacity, but automakers continues planning further expansion. The country's auto production capacity is predicted to exceed 16 million units by 2012.

 
China's leading auto companies, including SAIC Motor, FAW Group, Dongfeng Motor and Changan Auto, have each announced multi-million unit sales targets for the coming two years. Chery Auto has set an output and sales goal of 1 million units by 2012. Beijing Auto is aiming at output and sales of 1.5 million units in 2010 and 2 million in 2011.

The overcapacity problem is mainly due to the automakers' drive for output expansion, both of conventional vehicles and new-energy vehicles. At the same time, investment in new-energy vehicle construction is encouraged and booming in China, Xinhua said.

The Chinese government has stressed the importance of new-energy vehicle development, thereby inducing companies, including some unqualified one, to jump on the "new-energy" bandwagon. Industry experts have warned against repeated construction and overcapacity in new-energy vehicle development.

In the auto industry stimulus plan unveiled in March, China set a target of annually producing 500,000 electric vehicles and hybrid vehicles in 2009-2011, with new-energy vehicle sales making up 5 percent of total passenger vehicle sales. However, automakers' designed capacity has far passed the mark.

Chinese electric car maker BYD Auto has called for tax preferences and subsidies for new-energy car purchases. The automaker plans to increase its production by 800,000 units within two years, after purchasing a bus company in South China's Hunan province and expanding production in its Xi'an and Shenzhen plants.

Meanwhile, global automakers are also accelerating investment in China. Spanish auto component manufacturer the CIE Automotive Group says that the Chinese auto market promises much in the coming years.

Source : internet

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