Autocar reported Thursday that the Chinese government is expected to require mergers between the masses of car manufacturers later this year. Right now, there are 130 companies producing their own brand of car in China and the majority of those companies are selling less than 10,000 units per year. For comparison, Ford sells more than that in two average days in the US. Only 5 of those 130 companies sold more than a million cars last year and the top ten selling car companies accounted for a whopping 87% of sales. That means that 8% of the car companies are producing 87% of the cars sold annually… with the other 92% of the companies producing the other 13% of the cars sold. Autocar mentions that 87% of the market equaled 11.89 million cars, meaning that those other 120 small companies combined to produce less than 2 million cars.
To break it down:
10 companies (8% of the car companies in China) = 11.89 million vehicles
120 companies (92% of the companies in China) = Less than 2 million vehicles
By 2012, the Chinese government wants to see multiple companies with production capabilities of 2 million units per year, along with the hopes of seeing 20% of their vehicles sold to the export market. How does the government enforce this merger idea? Well, if the suggestion becomes law, car companies working to expand their production to the recommended 2 million per year will not be permitted to build new production facilities unless they merge with another company (or multiple other companies).
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