China Plans To Consolidate Auto Industry

Beijing plans to build up a 'Big 10' group of globally competitive automakers, led by GM partner Shanghai Automotive Industrial Corp., an industry association said.

SHANGHAI (AP) -- China plans to build up a "Big 10" group of globally competitive automakers, led by General Motors Corp. partner Shanghai Automotive Industrial Corp., an industry association said Wednesday.

The plan, part of a wider stimulus package for the auto industry, is also aimed at boosting sales and production this year to 10 million units and keeping growth at about 10 percent in the next few years, according to a report posted on the Web site of the China Association of Automobile Manufacturers.

An association spokesman referred questions to the report, originally by the Shanghai Securities News, but said he could not provide any further details.

The plan outlined in the report dovetails with the country's long-term strategy of consolidating numerous small regional manufacturers into bigger national auto groups, while at the same time encouraging use of more fuel efficient, lower polluting vehicles.

Foreign-brand cars still dominate the Chinese market thanks to a government policy of inviting foreign automakers to partner, as minority stakeholders, with local companies, such as Shanghai Automotive, also known as SAIC.

Foreign automakers including Volkswagen AG, Hyundai Motor Co. and Toyota Motor Corp. have invested billions of dollars in Chinese joint ventures, sharing technology and know-how in exchange for access to the country's potentially huge market.

But the final goal has always been for the country to develop its own brand vehicles.

One aim of the plan is to boost the share of domestic brand auto manufacturers to at least 40 percent from the current 34 percent, the report on the CAAM Web site said.

China's automakers are suffering a slowdown, but not the plunging sales seen in other major markets.

Chinese monthly auto sales surpassed those in the U.S. for the first time in January -- largely because of the sharp drop in American sales. Total Chinese auto sales last year rose 6.7 percent to 9.38 million units, the first time annual growth had fallen below 10 percent since 1999.

The government's plan calls for nurturing several automakers capable of making more than 2 million cars a year. Those would include state-run SAIC, which produced about 1.8 million vehicles last year, FAW Group, Dongfeng Automobile Co. and Changan Automotive Co.

The second tier of smaller automakers, with production capacity of 1 million cars or more, may include Beijing Automotive Industry Group, Guangzhou Auto and Chery Automobile Co., among others, the report said.

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