China Hopes To Reduce Number Of Automakers With New Policy

By Agence France-Presse A new Chinese policy for the automotive industry will introduce drastic methods to cut the number of companies in the sector, state media said Sept. 10. Under the new guidelines, which will replace an existing policy from 1994, the government will not approve new auto manufacturing projects "in principle," the Xinhua news agency said on its Web site. For projects that nevertheless do receive the green light, the guidelines also raise the threshold by requiring an investment amount of at least 1.5 billion yuan (US$181 million), Xinhua reported. China's auto industry consists of more than 100 producers, most of them so small that they produce less than three vehicles a day. It prevents the local industry from reaching economies of scale, and officials have long wanted to remedy the problem, so far with limited success. The new guidelines will aim for greater concentration in the industry, encouraging existing makers to expand production beyond their current locations through mergers with or acquisitions of smaller players, Xinhua said. China is the world's fastest growing major car market, with sedan sales from January to July reported at 998,900 units, a rise of 77.1% from the same period last year. Copyright Agence France-Presse, 2003