China manufactures two million extra vehicles
For the past decade or so, China has been looked upon by the automotive industry as something approaching a gold rush in waiting, with millions of units ripe for the selling. That may yet be true, but it's hard to reconcile that with the notion that China overbuilt to the tune of two million excess vehicles last year, and plans are in the works for about eight million more units. This, according to the country's National Development and Reform Commission.
Chinese vehicle sales are projected to hit 9 million units by the time 2010 slips from the calendar, so perhaps there won't be a glut of vehicles to drive prices and profits down. In the meantime, Chinese automakers are increasingly turning to exports to keep shifting units, which makes sense given that its vehicles are roughly 50 percent less expensive than European offerings, and 30 percent less expensive than Japan and South Korea.
What do you think, will China pan out? Or are automakers (both foreign and domestic) putting too much stock in its potential? Speak your mind in 'Comments.'
[Sources: Shanghai Daily; Taipei Times]
Reader Comments (Page 1 of 1)
Ben 5:33PM (6/08/2006)
I don't see why not.
There will be many bankruptcy, buyout and mergers.
Much like the early days of Hyundai, Kia and many other Korean car companies, by the end of the day what's left is Hyundai.
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ToddF 5:44PM (6/08/2006)
It's typical Chinese manufacturing mentality - no surprise here. They ALWAYS over-produce. They assume that their growth rates will continue ad infinitum, and they have more factories making the same stuff than ever before, and all are making at full capacities at all times - supply/demand ratios be damned.
Self-destruction is what I see for China's future - what they are doing now is unsustainable, and for cheap products like t-shirts, the oversupply (which is currently probably in the millions of container loads) is not so bad, but with cars, where the cost to manufacture has to be absorbed somewhere, it will cause some serious trouble when the government there stops printing money.
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UnionMan 5:57PM (6/08/2006)
Either way, the Chinese are taking American jobs and flushing them down the toilet. I really wish the American public would realize that our auto industry wouldn't be in such a mess if they would simply buy an American, Union made vehicle.
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Corey 6:27PM (6/08/2006)
We would, UnionMan, if your buddies with the white collars would design better cars. Blame them for making undesirable vehicles.
Given the same price, the consumer will not settle for a subpar product.
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zhonghuarising 6:29PM (6/08/2006)
I agree with Todd's comments. I just don't see any way for China to sustain overproduction of cars and such. It will be interesting to see how this plays out in the next few years or so.
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rez 7:15PM (6/08/2006)
Maybe if the unions didnt ask $20+ dollars an hour
cars would be cheaper and people would buy more. And if people bought more there would be more people working. Go figure!
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Howard Kerr 9:15PM (6/08/2006)
Well folks, there you have it, GM and Ford aren't the only car manufacturers overbuilding to meet a non-existent market.
I agree with the posters that believe there has to be a shake-out...and soon. It has happened in every country that has started producing cars and trucks since the turn of the last century. Unfortunately, foreigners are involved in the buildup of the Chinese car manufacturing industry and I believe the government will eventually find a way to "ease out" ALL foreign involvement in vehicle manufacturing. GM, Ford, and ALL NON-Chinese companies will be shown the door...so to speak.
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Mick 9:17PM (6/08/2006)
I am 78 years old and remember making the statement:
Japan will never be able to sell any cars in the USA, Remember Pearl Harbor! How soon we forget!
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Antonio Gantus Filho 9:23PM (6/08/2006)
95% of Chinese don't have money to eat or for the basice things in life, so how to think they will ever have a consumption level as the Americans or Europeans. I think the automakers are totally exagerating with regards to China and also India. These are not traditional markets.
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Ray 9:46PM (6/08/2006)
antonio, you need to take a vacation and visit China sometime. you will be suprised. ignorance towards the chinese based on false assumptions and your made up statistics will not last you very long in the very near future.
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selihcra 10:44PM (6/08/2006)
TV -> laptop -> Car
First TV set, then laptop PC, world enjoy the products of Chinese manufactures. There will be no surprise in the near future, Chinese made cars appear everywhere.
As a Chinese, I am very proud of the recovering Chinese power.
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mike 11:10PM (6/08/2006)
Guys guys ur missing how Chinese operates .. they overproduce and guess where these cars gonna go? how about exports? with labor really cheap im sure chinese cars are even cheaper than korean cars ... there goes the trade deficit with China ever growing in billions and billions more .. Mexico is a really a country US should consider helping out to recover instead of China .. im sure Mexico can do as good or even better products than China .. and guess what US government wont be worrying too much of people from Mexico crossing the border .... US move ur China plants to Mexico n u'll see cheaper products for people of America, you help build Mexicos economy, ur problem with people crossing the border will decrease and trade deficit with China decreased .. by the way im not Mexican
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Terrel Owens-type 12:05AM (6/09/2006)
UnionMan,
Maybe we WANT to flush you down the toilet...have you ever thought of that?
I have...and trust me, I DO.
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ben 2:40AM (6/09/2006)
"US move ur China plants to Mexico n u'll see cheaper products for people of America,"
look at VW ... lol
yeah moving their plants to mexico helped them a lot ...
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bob 5:56PM (6/09/2006)
The cars from China are going to be super cheap and super cheaply made. They will have realiblilty problems for the 1st few year but then they will start to get their quality under control. In 5-10 yrs they will be worth looking at. Until then, I'd stay away
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Dave 9:14PM (6/09/2006)
Don't forget GM is number one in China, so its much better to cooperate with China than to boycott their products.
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tekdemon 10:18PM (6/13/2006)
The problem with thinking like UnionMan's is that it would actually make our country that much weaker, and poorer. Basic economics says that you build what you're the best at building and export it to others, and that'll help your economy the most.
Now, if everyone in the US just blindly bought US made even if it WASN'T what we were best at making, we'll basically end up paying tons of money for sub-par goods that we just suck at making.
See each country has it's own natural resources, and that affects how cheaply you can make stuff. For example if you have lots of trees, you can export cheap wood. Some countries don't have tons of trees everywhere. And some countries have tons of oil so it's cheap to produce, and you can export it.
Now if you wanted to buy American everything, the problem here is that everything would cost like 100x as much, because we don't have wood that's as cheap as other people, we don't have that much oil, etc.
Sometimes it's just a matter of shipping things, for example if your country doesn't have a lot of steel it makes very little sense to have steel shipped in at a great cost just to build steel products in your country. It'd make much more sense for a country with plenty of steel to just make the products for you, while you make whatever you have plenty of resources for and trade with them.
If every country had to build everything, it'd be ridiculously inefficient. Most of us have jobs, and we perform a fairly restricted role-because we all do what we're pretty good at, and we all get money for our jobs, then we trade our money for services from other people who are good at other stuff, or can do stuff cheaper than us.
Now imagine if you had to do all the jobs because you only want to buy from yourself. You'd have to flip your own burgers at McDonald's, assemble your own motherboards by soldering, act in your own movie that you shoot, write your own books, etc. And since you're not a great director, a great cook, a great solderer, or a great writer, ALL OF THOSE THINGS will just be sub-par and take tons of time to produce because you're not good at it.
So under UnionMan's plan if we all bought American, America would basically be a country trying to make a lot of products we're just no good at, and wasting tons of manpower that could be used for better stuff.
Now personally I think we can still compete in the car arena successfully, but the solution is definitely not to just buy American blindly, all that'll cause is:
1) American manufacturer's won't bother to innovate as much, and will let costs creep up.
2) Other countries will see that we're being protectionist and simply stop importing GM and Ford cars, which isn't gonna help since GM and Ford sell more cars elsewhere than in the USA.
3) Plenty of people who probably aren't the best at making cars would end up getting jobs as car manufacturers because those jobs would be available and have ridiculously high pay (see GM legacy pay), so instead our $60/hour workers being research scientists working on some medical breakthrough (hey, our pharmaceutical sector is actually profitable) that same scientist ends up being an assembly plant worker because it pays better. Does that sound like the kind of thing that'll give your country an edge?!
Hell, if they had plenty of assembly jobs here that paid $60 I wouldn't have gone to college either. Would that have been the best use of my talents though? Probably not, and that's the very problem with what UnionMan is suggesting.
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selihcra 12:30AM (6/19/2006)
Good product and cheap/crap product from China
There are good products made in China, like the iPod, Nike shoes.
There are also crap product made in China, like .99 store goods.
If you are looking for a dirty cheap car, you will get a crap made from China. Most likely, the Chinese car will be like all the Walmart goods, not so best but enough in quality.
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autonews 2:34PM (7/20/2006)
That is true, Dave
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