SHANGHAI, China (AP) — China's auto output and sales are forecast to reach a record 9 million units in 2007, media reports said, amid continuing problems with overcapacity.
The forecast is higher than earlier estimates of 8.5 million in sales and output, the state-run newspaper China Daily reported Sunday, citing Zhang Xiaoyu, vice president of the China Machinery Industry Federation.
Meanwhile, a top economic planner warned that production capacity in the auto sector has exceeded 10 million units — far beyond sales of 7.2 million units in 2006 that made it the world's second largest auto market last year, surpassing Japan.
Output in 2006 was 7.3 million units.
Despite rising profits and fast growth, China's auto industry is still facing excess capacity, an underdeveloped auto parts industry and poor service, said Zhang Guobao, a vice minister of the National Development and Reform Commission, at a conference in the northeastern city of Tianjin, the official Xinhua News Agency reported.
China is the world's fastest growing major auto market, with average annual growth of 26 percent 2001-2006. In the first half of 2007, output rose 22 percent over the same period the year before to 4.5 million vehicles. Sales for the period rose 23 percent to 4.4 million.
But soaring investment has reinforced worries over excess capacity.
In January-June, investment in auto plants and equipment hit 78.9 billion yuan ($10.5 billion), compared with about 150 billion yuan ($20 billion for all of 2006, the Xinhua report said.