Ponce
26th April 2010, 09:10 AM
Carmakers ‘Unsustainable’ Growth in China Risks Overcapacity
April 26-- Toyota Motor Corp., Volkswagen AG and Nissan Motor Co. are raising production capacity and sales forecasts in China, betting vehicle demand will continue to grow even if the government scraps car-buying incentives.
Volkswagen, the biggest foreign carmaker in China, will invest 4.4 billion euros ($5.9 billion) in plants and new models by 2012, while Nissan aims to boost capacity in the nation almost 70 percent, the companies said April 23 at the Beijing Auto Show. Toyota and Hyundai Motor Co. are also building new factories in China, the world’s largest vehicle market.
The automakers are competing for market share as Volkswagen estimates the growing wealth of China’s 1.37 billion people may raise the nation’s auto demand as much as 20 percent this year. Nissan predicts growth may slow next year as China has signaled it may end a tax break for small cars, and industry consultants JD Power & Associates and IHS Global Insight say carmakers risk building too many plants.
“China’s motorization is reaching the masses,†said Takanobu Ito, Chief Executive Officer of Honda Motor Co., Japan’s second-largest carmaker. “Even after the tax break ends, demand shouldn’t drop very much.â€
China’s vehicle sales growth this year will exceed Honda’s original estimate of 10 percent, Ito said at the auto show. Xu Changming, a research director at China’s State Information Center, said last week demand may rise about 17 percent to 16 million vehicles, down from 46 percent last year.
April 26-- Toyota Motor Corp., Volkswagen AG and Nissan Motor Co. are raising production capacity and sales forecasts in China, betting vehicle demand will continue to grow even if the government scraps car-buying incentives.
Volkswagen, the biggest foreign carmaker in China, will invest 4.4 billion euros ($5.9 billion) in plants and new models by 2012, while Nissan aims to boost capacity in the nation almost 70 percent, the companies said April 23 at the Beijing Auto Show. Toyota and Hyundai Motor Co. are also building new factories in China, the world’s largest vehicle market.
The automakers are competing for market share as Volkswagen estimates the growing wealth of China’s 1.37 billion people may raise the nation’s auto demand as much as 20 percent this year. Nissan predicts growth may slow next year as China has signaled it may end a tax break for small cars, and industry consultants JD Power & Associates and IHS Global Insight say carmakers risk building too many plants.
“China’s motorization is reaching the masses,†said Takanobu Ito, Chief Executive Officer of Honda Motor Co., Japan’s second-largest carmaker. “Even after the tax break ends, demand shouldn’t drop very much.â€
China’s vehicle sales growth this year will exceed Honda’s original estimate of 10 percent, Ito said at the auto show. Xu Changming, a research director at China’s State Information Center, said last week demand may rise about 17 percent to 16 million vehicles, down from 46 percent last year.