Report: China to 'force' car company mergers, hopes to consolidate market

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Filed under: China, Government/Legal, Plants/Manufacturing

Currently, there are 130 different automakers existing in China, and in an effort to create stronger companies, the Chinese government will be releasing plans to encourage mergers and buyouts between the different manufacturers. These new guidelines, drawn up by the Chinese Ministry of Industry and Information Technology, is said to prohibit automakers from building new plants unless they acquire another existing manufacturer first.



Autocar reports that presently, the majority of China's automakers sell less than 10,000 units annually, with only five manufacturers moving more than one million cars last year. To put that in better perspective, the country's top ten automakers accounted for 87 percent of the country's automobile sales, or 11.89 million cars. With statistics like that, it's no wonder that the government is urging these different car companies to merge.



What's more, this restructuring plan is all part of the Chinese government's long-term goal to have 20 percent of its automakers' sales to be exported, something that the country hopes to achieve by the year 2015. And with larger, stronger companies making up the bulk of the country's auto industry, that might not be too hard to achieve.



[Source: Autocar | Image: Frederic J. Brown/AFP/Getty Images]

Report: China to 'force' car company mergers, hopes to consolidate market originally appeared on Autoblog on Thu, 13 May 2010 17:00:00 EST. Please see our terms for use of feeds.

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