China regulator, researcher disagree on auto capacity

TIANJIN (Reuters) - China’s top economic planner and a leading government-backed research body disagreed at an auto industry forum over whether the world’s largest auto market is facing excessive capacity after breakneck growth in 2009.

China’s top 30 auto groups are expected to have a combined vehicle capacity of 31.24 million units by the end of 2015, up from 13.95 million units as of the end of 2009, a senior official at the National Development and Reform Commission (NDRC) official the forum, which ended on Sunday.

Research results from other government bodies showed planned auto capacity in China’s northeast, southwest, east and south is even higher than the NDRC’s estimate, Chen Bin said, without elaborating.

Blind expansion will not only hurt the sustainable and healthy development of China’s auto industry, but also affect the country’s economy, said Chen, director of NDRC’s industry coordination department.

Zhao Hang, president of China Automotive Technology & Research Center, disagreed.

“Judging from market growth rate and sales volume, China’s auto capacity is not excessive,” Zhao told the forum.

“Many auto plants are working long hours, adding weekend shifts in order to meet market demand. Can we still say we have overcapacity problem?”

China has been a major bright spot amid a global industry still struggling to recover from last year’s steep downturn.

The market has shown signs of slowing down beginning in the second quarter, but bounced back strong in August helped largely by Beijing’s subsidies for fuel-efficient cars.

Some industry observers have said the upturn in demand could extend to the rest of year if automakers slash their prices.

But auto executives were more cautious.

"Personally I believe quarter three, quarter four there will still be growth, but I don't think there will be a 60 percent growth," Jeffrey Shen, president and chief executive of Ford's F.N car venture told Reuters.

Shen said he had maintained his previous forecast for a 15 to 25 percent expansion of the Chinese car market in 2010 despite a 59.3 percent year-on-year rise in August after a sluggish summer.

Reporting by Fang Yan and Ken Wills