Chinese carmaker Chery Automobile has revealed plans for another new plant, while two other new facilities are already under construction. The firm, which achieved sales of 500,000 units in 2009, will invest RMB 20 billion (US$2.93billion) in the plant, to be based in the city of Erdos, Inner Mongolia. Based on the size of the investment, the plant's annual capacity has been estimated at 500,000 units.
Chery is being aggressive in ramping up its domestic capacity, with plants in Wuhu and Dalian already under construction. The company is spending RMB 10bn on the Wuhu plant, which will produce passenger cars, engines and gearboxes, while the RMB4.7bn Dalian facility will produce 200,000 passenger cars per year. When the two plants come onstream in 2012 they will increase Chery's annual production capacity to over 1mn units from the current 650,000 units. With the addition of the Erdos plant, plus a factory for micro-buses and light trucks in Kaifeng, Chery's total capacity will reach 1.8mn units.
However, Chery's rapid capacity expansion underlines the concerns of the government that the industry may reach the point of overcapacity if carmakers continue to invest in new facilities while sales growth cools off. New policies are reportedly being considered, which would provide incentives for mergers in the industry, mostly aimed at encouraging 'Tier 1' producers to absorb smaller 'Tier II' firms. As China's largest privately owned carmaker, Chery would likely be encouraged to acquire smaller businesses.
Although China's vehicle market registered growth of 124% year-on-year in January, this is still largely incentivised growth after the government extended its car buying subsidies. Although installed capacity continues to grow, BMI forecasts that total vehicle sales growth will slow by an annual average of 1% over the next five years, meaning growth in actual output required to meet demand will also be lower, falling to below 10% by 2014.
|
| We are collecting readers' comment for improving our website. If you are willing to help, please CLICK HERE to complete a survey. Your comments matter. |
|
|
|
|
| Copyright © Adsale Publishing Limited. Any party needs to reprint any part of the content should get the written approval from Adsale Publishing Ltd and quote the source "Chinamac Journal (CMJ)", Adsale Machine-Building Website - www.AdsaleCMJ.com. We reserve the right to take legal action against any party who reprints any part of this article without acknowledgement. For enquiry, please contact Editorial Department. |
Write a mail to the editor : 
