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China aims to merge automakers as economy falters
The Chinese government aims tocut the number of major auto-making groups through mergers to 10at most from 14, an official newspaper reported, as the globaleconomic crisis adds urgency to restructuring the fragmentedsector.
The plan, approved by the cabinet this month, also calls for5 billion yuan ($732 million) in government subsidies from Marchto the end of 2009 to aid purchases of autos in rural areas, theChina Securities Journal quoted unnamed sources as saying.
'Pulling resources together makes sense when the market getssoft, as you can at least cut costs,' Qin Xuwen, industryanalyst with Orient Securities.
'I think the government is serious this time as the carmarket, which has been booming for years, has slowed downsignificantly.'
China is drafting a string of policy packages to helpindustries, ranging from steel to logistics and consumer goodsmanufacturing, to ride out the slumps in the Chinese and globaleconomies.
The auto plan aims to stabilise demand for cars so thatChina's total vehicle sales and production this year both exceed10 million vehicles, and grow an average 10 percent annuallyover the next three years, the newspaper said.
Total vehicle sales, including cars, buses and trucks, rosejust 6.7 percent to 9.38 million vehicles last year, accordingto the China Association of Automobile Manufacturers.
Sales plunged 14.35 percent from a year earlier in Januaryof this year.
FOOT-DRAGGING
The newspaper said Beijing would use fiscal policy andadministrative measures to encourage more sales of low-emissionvehicles, replacement of old cars with new ones, development ofconsumer financing for car purchases, and increased governmentprocurement of domestically developed models.
It would seek to reduce the 14 major auto groups, whichtogether account for more than 90 percent of the market, to 10at most, although the newspaper did not give a timetable or namethe groups that might be involved in the consolidation.
Analysts expected consolidation, which has been hampered byregional governments keen to protect local sources of jobs andtax revenues, could proceed quickly with renewed governmentresolve to push through an industry shake-out.
The plan, approved by the cabinet this month, also calls for5 billion yuan ($732 million) in government subsidies from Marchto the end of 2009 to aid purchases of autos in rural areas, theChina Securities Journal quoted unnamed sources as saying.
'Pulling resources together makes sense when the market getssoft, as you can at least cut costs,' Qin Xuwen, industryanalyst with Orient Securities.
'I think the government is serious this time as the carmarket, which has been booming for years, has slowed downsignificantly.'
China is drafting a string of policy packages to helpindustries, ranging from steel to logistics and consumer goodsmanufacturing, to ride out the slumps in the Chinese and globaleconomies.
The auto plan aims to stabilise demand for cars so thatChina's total vehicle sales and production this year both exceed10 million vehicles, and grow an average 10 percent annuallyover the next three years, the newspaper said.
Total vehicle sales, including cars, buses and trucks, rosejust 6.7 percent to 9.38 million vehicles last year, accordingto the China Association of Automobile Manufacturers.
Sales plunged 14.35 percent from a year earlier in Januaryof this year.
FOOT-DRAGGING
The newspaper said Beijing would use fiscal policy andadministrative measures to encourage more sales of low-emissionvehicles, replacement of old cars with new ones, development ofconsumer financing for car purchases, and increased governmentprocurement of domestically developed models.
It would seek to reduce the 14 major auto groups, whichtogether account for more than 90 percent of the market, to 10at most, although the newspaper did not give a timetable or namethe groups that might be involved in the consolidation.
Analysts expected consolidation, which has been hampered byregional governments keen to protect local sources of jobs andtax revenues, could proceed quickly with renewed governmentresolve to push through an industry shake-out.
