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Recently, the National Information Center released the Green Paper of the 2007 China and World Economic Development Report. The Green Paper believes that in 2007 and for a long time to come, China will maintain strong demand for automobiles, but overcapacity, rising costs, chaotic export order, and overall decline in profits will continue to plague the auto industry.
According to the analysis of the Green Paper, the main problem that has caused headaches in the automotive industry in China is overcapacity. In 2005, China’s auto industry had over 2 million vehicles in production capacity, and 2.2 million vehicles were under construction. The new capacity of brewing and planning was 8 million vehicles. Some local governments have turned green on the capital flowing into auto manufacturing, which has suddenly crowded the auto industry. Relevant data show that almost all auto companies joined the price war in 2006, while the inventory is increasing, reaching 115,000, 137,000 and 14 in June, July and August respectively. 99,000 vehicles, an increase of 118% compared to the beginning of 2006. Therefore, the Green Paper believes that if this situation is still ignored, business failures, employee unemployment, bank bad debts and financial risks will be inevitable.
Another problem that plagues the automotive industry is the chaotic order of auto exports. In 2005, there were as many as 1,025 auto export enterprises in China, of which only two had export value above 100 million U.S. dollars, and only 8 of them exceeded 30 million U.S. dollars, but only 204 cars were exported to only 1 car a year. . The export of automotive products is of a low grade and has a high degree of homogeneity. Mainly in commercial vehicles such as trucks, the proportion of cars is less than 20%, and models are mainly medium and low grade. When manufacturing costs rise, the low-cost advantages of China's autos will gradually be lost. In addition, the low-price strategy will also harm the international brand image of China's autos, because some companies cannot guarantee product quality and after-sales service after selling at low prices.
According to the Green Paper, although profit from automobile manufacturing has increased significantly since the same period of last year, it was realized in 2005 when the profit base was extremely low, and it showed unsustainable characteristics. Because the contradiction between supply and demand in the auto industry is not mitigated but aggravated in the future, the production capacity that has been nurtured for many years will inevitably pull the entire industry into a more profitable space, and there will be no signs of a substantial drop in the rise in raw materials in the future. However, the Green Paper also pointed out that, despite all kinds of problems, the good prospects of China's auto industry are still beyond doubt. It is expected that the automobile production and sales will continue to grow in 2007, and the market demand will exceed 8 million vehicles, an increase of 18% over 2006; the output will exceed 9 million vehicles, an increase of more than 20% from 2006. 