Excessive capacity, inadequate auto parts industry and shoddy services hamper China's auto industry

Shanghai. September 14 (Gasgoo.com)- Despite fast expansion and growing profits, China's auto industry is still facing excessive capacity, an inadequate auto parts sector and poor service, a seinor government official said at a conference in Tianjin last week.

"In 2006, China's auto output sales have reached 7.2 million units; However, the output capacity of China's auto sector has exceeded 10 million units and  it is still growing," said Zhang Guobao, deputy director of National Development and Reform Commission.

Official statistics show that during the 10th five-year-plan (2001-2005) period, China's total fixed-assets investments in auto industry reached 235.16 bln yuan (US$31.26 bln) ; the amount is larger than total investments over past decades. However, China's total fix-assets investments in auto industry reached 150 bln yuan in 2006 and 78.9 bln yuan in the first half of 2007.

By contrast, China's auto parts sector lagged far behind, Zhang said. "China has few large auto parts businesses that could compete with global giants. The underdeveloped auto parts sector has hampered China's auto industry," he added.

On the other hand, China's auto industry is also impeded by poor aftermarket services, especially auto logistics, Zhang said.