China's New Rules: Tesla Must Stay Home, Used Car Factories Go Up In Price
China has effectively closed its doors to any new carmakers wanting to produce in the world’s largest automakers, a report in Beijing-based business publication Caixingglobal said. Capacity expansion by domestic automakers, and by joint ventures with overseas OEMs, also will be heavily curtailed.
China’s powerful state planner, the National Development and Reform Commission (NDRC) outlined projects that won’t get its approval under the policy, “covering most new investments for car production,” China’s most authoritative financial news source said.
Some expansion of existing car-producing ventures can be allowed under strict conditions. Capacity utilization must be redlining, and pledges for more new-energy vehicles must be made.
For nearly a decade, China has suffered from rampant overcapacity. Some 28 million units were sold in China last year. Production capacity in the country should be good for twice that amount. In the auto industry, capacity utilization above 80% is seen as healthy. China is generally seen at 50%. For more than a decade, Chinese planners have called for a drastic consolidation of its more than 100 automakers.
This is exactly the sort of state meddling that makes me not worry too much about Chinese competitors (at least in markets outside China). Consolidation would have happened anyway when the industry is ready for it, like it did in the US in the early/mid 1900s. Trying to force a major industry's hand hardly ever works as planned.
OTOH, there may end up being many exceptions to the rule that it may not matter all that much (at least for the companies with the right connections). Just like how a lot of my Chinese-born friends have siblings although they were born during the days of the one-child policy.
A side effect of this could be a reduction of urban decay. This forces the strong companies to use existing plants instead of building new ones,vs letting the secondary companies go out of business and the factories simply decaying. Though with 50% of the plants being unnecessary sounds like no matter what some plants just aren't needed. Which is a similar story for a lot of other Chinese industries. China looks to be a place of huge urban blight in the future.
Maybe, maybe not. But the alarm bells should be going off to all of those bureaucrats who have put China ahead of North America when it comes to product development.
Originally, the Chinses planned to partner every Foreign bran in the hopes that eventually,
sales would begin to swing back towards the local brands as the experience and quality level
improved...
The learning curve for the Chinese is that the Chinese people prefer the Western and Asian brands
to their local domestic brands - the transition of sales to those local brands has pretty much failed.
I wonder if the concern now is that the foreign brand are too popular and infact taking a lot of money
and developed IP out of the country....
Yes your right and there largest share holder is Berkshire Hathaway at 24% per a little Google research. They do have a subsidiary 50/50 partnership with Daimler called Denza.
Changan Ford Automobile Co., Ltd. (CAF) Assembly Plant 1 in Chongqing is where the current Focus is assembled, and will likely be one production base for the next generation model.
I foresee a lot more electrification for GM's US market coming from China moving forward. Maybe not right away, with threats of import taxes.If China is putting its foot down for commitments for alternative energy vehicles, this is would make sense on a global scale.
So when are we finally going to break down China's trade barriers and allow mass importation into their shores of US produced vehicles? I can't believe we are allowing this one sided trade to continue.
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