| The demand for automobiles from China will | | | | auto. |
| remain robust in 2007 and beyond, but | | | | The document says China auto export industry |
| overcapacity, a chaotic export system and falling | | | | produces mostly duplicated products targeting low |
| profitability will continue to plague the industry, the | | | | end to mid range markets. |
| State Information Center said in a document on | | | | The document says China will lose its competitive |
| domestic and global economic development in | | | | edge in car exports because of rising production |
| 2007. | | | | costs. And the price-slashing tactic generally |
| The document says overcapacity remains the | | | | adopted by Chinese car exporters will damage |
| biggest headache for the China car industry. In | | | | the international image of made in China cars, as |
| 2006, the National Development and Reform | | | | some companies cannot provide after-sale service |
| Commission, China top economic planner, began to | | | | when products are sold at such low prices. |
| list car-making as an overcapacity sector. That | | | | Though China car makers reaped big profits in |
| year most firms became caught up in price wars | | | | 2006, the trend is not sustainable on the long |
| as inventory kept rising. | | | | term, said the State Information Center |
| The document says that if the government | | | | document, citing a worsening supply-demand |
| encourages more firms to enter the sector by | | | | imbalance that will be exacerbated by the rising |
| not raising industry thresholds, bankruptcies, | | | | cost of materials. |
| unemployment and unpaid bank loans will inevitably | | | | However, despite all the negative factors, the |
| result. | | | | document said the demand for cars from China in |
| In 2005, China had 1,025 auto exporters, of which | | | | 2007 will rise by 18 % over 2006 to 8 million |
| only two had exports valued above US$ 100 | | | | units, while car output will reach 9 million units, 20 |
| million and only eight had exports above $ 30 | | | | % higher than in 2006. |
| million. Another 204 firms each exported just one | | | | |