KPMG: Serious excess of Chinese auto production capacity in 2016

A survey report published by KPMG recently pointed out that in 2016, the Chinese auto market will be the country with the most serious problems of oversupply in the BRIC countries (Brazil, Russia, India and China).

The 2016 forecast for the Chinese auto market comes from the 13th annual global auto industry executive survey report released by KPMG. The survey interviewed 200 senior executives from the global automotive industry. Among them, more than half of the respondents believe that overcapacity and oversupply will be the major concern for the Chinese auto industry in the future regarding the “structural excess” of China’s auto production capacity. In the domestic industry has always existed. According to statistics, in 2015, China's auto production capacity will reach 32.5 million, which means that three years later, the annual sales of automobiles will have to double. Judging from the state of last year, the Chinese auto industry is entering a period of deceleration.

Another conclusion of the survey is that Chinese automakers are expanding their overseas operations through joint ventures and alliances, and China will continue to dominate the global automotive market. The survey shows that of the top 20 automakers whose share in the international market is expected to rise in 2016, 9 are Chinese brands, including Geely Automobile, Shanghai Automotive and Chery Automobile.

Andrew KPMG, partner of KPMG's China automotive management, pointed out that the increasingly close cooperation between Chinese automakers and their joint venture partners is also critical to the future development of the industry.

Andrew believes that the recent changes in China’s investment policy, overseas manufacturers (OEM) will rely more on their joint venture partners in market access and development; at the same time, Chinese manufacturers are also determined to expand overseas markets. The close cooperation between the two is beneficial to the tactical benefits of reciprocity and mutual benefit.