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]

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