China To Build 3.6 million Vehicles In 2003

SHANGHAI, Jan 21, 2003; Reuters reported that China's blossoming auto industry is expected to produce 3.6 million vehicles this year, 1.3 million of them cars, the official Xinhua News Agency said on Tuesday.

That would represent a 19.2 percent rise in car production from last year and a 10.8 percent rise in overall vehicle output, according to 2002 figures provided by the State Development Planning Commission last week.

Xinhua quoted Ma Liqiang, head of the economic operations bureau of the State Economic and Trade Commission, as saying mergers and restructurings of major Chinese auto companies would increase capacity substantially.

Ma said the growth of the industry would encourage private car ownership and individual buyers would account for approximately 60 percent of sales.

China'a auto market is the fastest-growing in world, with annual sales of passenger cars topping the one million mark for the first time last year.

The auto industry, led by the joint ventures of the world's biggest auto titans, such as Germany's Volkswagen AG and U.S. General Motors Corp, made gross profits of about $5.2 billion in 2002, up 61 percent from the year before.

Although most analysts see car sales growth slowing this year from 2002's surprisingly strong 56 percent, they say the market will continue to grow steadily due to rising incomes of Chinese families after years of robust domestic economic growth.

Many foreign car makers are expanding their operations in China, either through joint ventures with domestic partners, acquisitions or technology transfer agreements.

FAW Car Co said it started rolling out Mazda Motor Corp's Mazda6 mid-sized sedans on Tuesday through a technology licensing pact under which Mazda provides the kits and technical assistance and FAW builds the cars.

Xinhua said Ma urged companies to be wary of blind expansion, adding that regulations would be issued soon to direct investment, consumption, loan management and other aspects.

China's vehicle industry is crowded with about 110 manufacturers, but only 12 have annual capacity of more than 50,000 vehicles. The government has called for the consolidation of tiny domestic players which do not make a single car a year.