Shanghai, January 29 (Gasgoo.com) China's regulators will not approve auto capacity expansion project of its automakers unless they first agree to take over a domestic rival, Reuters reported today, citing the Shanghai Securities News.
According to a new version of policy guidelines due to come out by March, the government will only give the greenlight to new vehicle projects and capacity expansion of those automakers that first acquire a domestic peer. Those will merger deals will also be rewarded with tax, credit and other incentives.
The Chinese government has been urging mergers and acquisitions among the country's more than 100 automakers, aiming to create a few national champions able to compete with global giants at home and abroad, and meanwhile to have the underperforming companies eliminated from the auto industry.
Last year, combined sales of China's top 10 automakers came to 11.9 million units, accounting for 87% of total sales that year. Remaining players in the Chinese auto market each posted annual sales of 10,000 units or fewer.
SAIC Motor Corp, China's biggest automaker and a partner with General Motors and Volkswagen AG, sold 2.7 million vehicles in 2009, less than a third of Toyota Motor's tally of 8.27 million units for that year.
China plans to cut the number of major Chinese auto groups to less than 10 from the current 14, and creates two or three mega-producers with annual output of more than 2 million vehicles each.
