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China to produce 12 mln vehicles in 2009, but over-capacity risk looms

Source xinhuanet 2009-09-11

TIANJIN, Sept. 5 (Xinhua) -- China is forecast to produce 12 million units of vehicles for the whole year of 2009, to set a record high, an official with the National Development and Reform Commission (NDRC), China's top economic planning agency, said here Saturday.

Chinese domestic auto makers were expected to produce and sell more than 8 million units of vehicles in first eight months this year respectively, said Chen Bin, director of the Department of Industry under the NDRC.

The government's stimulus plan for the auto industry formulated this year had achieved great success in terms of boosting domestic demand and ensuring the industry growth, he said at the on-going 2009 International Forum on Chinese Automotive Industry Development held in Tianjin.

Sales of China's domestically-made automobiles totaled 1.09 million units in July, up 63.57 percent from a year earlier, the fifth month in a row that saw auto sales exceed one million units, according to the China Association of Automobile Manufacturers.

Chen said the government's measure to halve the purchase tax on small-capacity cars had boosted the development of the country's small-engine vehicle sector.

China cut the purchase tax on passenger cars to 5 percent for models with engine displacements of less than 1.6 liters in January.

However, he warned that the growth pace of China's auto industry might be slower in following years and there might be risks of over-capacity, adding that domestic auto makers should focus on research and development on energy-saving, environment-friendly new energy vehicles for enterprises' sustainable development.