Automobile Industry 01 (Aug 08 - Sep 15)

[winston]

Booming China auto industry faces over-capacity

China should end preferential policies for automotive companies in order to curb over-capacity in an industry where sales jumped 55 percent in August, a government official said.

Chen Bin, a top official at China's economic planning agency, said booming auto sales were leading to blind investment in the industry, which could result in annual production capacity of over 31 million units by 2015.

"Serious overproduction capacity will lead to negative market competitiveness a loss in enterprise efficiency, factory stoppages and other problems," Chen said at an automotive symposium on Saturday.

"Judging from our understanding of the situation as reported by local governments and related departments, production capacity will far outstrip market demand for the coming period (ending in 2015)," he said in a report on the website of the National Development Reform Commission.

Last year, China became the world's largest auto market when over 13.6 million vehicles were sold.

Sales have boomed this year, jumping 55.7 percent in August year-on-year, as the government rolled out a new subsidy scheme for energy-saving vehicles.

In order to curb overcapacity, local governments should stop pushing manufacturers to increase production and end preferential tax and land policies aimed at spurring production, Chen said.

He said the industry's penchant for using preferential energy-saving policies to ramp up production of traditional automotive products should also be curbed.

China announced a trial programme in June to subsidise environmentally-friendly vehicles in five cities as part of efforts to reduce emissions, save energy and spur the development of green technology.

Under the trial project, the government offers subsidies of up to 60,000 yuan (8,850 dollars) for hybrid and electric cars and 3,000 yuan for fuel-saving models.

Source: AFP Global Edition

[winston]

China auto sales growth slows as demand moderates

China's auto sales slowed further in September as a boom fueled by tax breaks and subsidies faded.

Official figures for the month, delayed by a weeklong national holiday, showed total sales rising 17 percent from a year earlier to 1.56 million vehicles, down from 18 percent in August, the China Association of Automobile Manufacturers reported Tuesday.

Sales rose 16 percent in July and 21 percent in June, but have generally slowed since spring.

Passenger car sales rose 19.3 percent to 1.2 million vehicles, the group said on its website.


Source: AP

[winston]

China carmakers' plans raise overcapacity concerns by Boris Cambreleng

China's auto market overtook the United States in 2009 as the world's largest and will remain so this year with up to 17 million vehicles expected to be sold.

The Chinese market potential remains huge in the world's most populous nation as the percentage of people owning cars is still relatively low, analysts have said.

Sales in 2010 are expected to increase by between 25 percent and 30 percent, after a massive 46 percent surge last year, as an emerging middle class snaps up cars along with other consumer status symbols.

"At the moment, the international joint ventures just don't have enough capacity to build all the cars they could sell," Klaus Paur, of TNS Research International, told AFP.

"This of course triggers investment decisions," he said, adding that much of the current growth was coming from China's inland provinces where the potential for auto sales is the biggest.

To meet the rising demand, foreign automakers last year began announcing plans to increase their production capacity.

While gearing up to open its 10th factory in China this year, German auto giant Volkswagen also announced it will open an 11th production facility in 2013.

PSA Peugeot Citroen will boost production capacity at its joint venture plant with Dongfeng from 450,000 units to 750,000 units, while also setting up a second joint venture plant with Chinese automaker Chang'an in Shenzhen.

Since the beginning of last year, Nissan, Toyota, BMW, Hyundai, the Chinese automaker FAW and others have all announced plans to build new factories.

Local provinces and cities are also adopting numerous initiatives to encourage the expansion of production facilities.

But the pace of investment in car production has raised concerns by the National Development and Reform Commission, China's powerful economic planning agency.

"Serious overproduction capacity will lead to negative market competitiveness, a loss in enterprise efficiency, factory stoppages and other problems," Chen Bin, a leading commission official, told the National Business Daily while warning of "blind investment" in the sector.

Production capacity of 31 million vehicles projected for 2015 by 30 major manufacturers is nearly double current capacity, but remains lower than the total capacity projected by China's regional governments, the commission said.

"Manufacturers in the sector think that sales will exceed 30 million vehicles in 2015, but the NDRC (the reform commission) thinks that this figure will not be reached," said Jia Xinguang, an auto sector consultant.

TNS researcher Paur raised concerns that there will be too much capacity in two or three years "because the market may be slowing down".

Projecting market trends is always difficult for auto makers who often need up to two years to build new plants, he added.

"It's not the first time the government makes such an alert. It happens every three or four years," said John Zeng, a market analyst with the consulting firm J.D. Power.

"Manufacturers are paying attention to market swings and will readjust their investment if necessary," he said, adding that announced increases in production capacity were not always realised.

Source: AFP Global Edition

[winston]

Chinese Autos

Not vested

DJ MARKET TALK: All HK-Listed Auto Names Will Take Tax Hit -BOAML

1333 [Dow Jones] Against market view only foreign JVs would be hurt by introduction of City Construction Tax, Education Surcharge, Bank of America-Merrill Lynch highlights all HK-listed auto names should suffer with 6.0%-15% earnings cut, including local brands, like BYD (1211.HK), Great Wall (2333.HK), Geely (0175.HK), because they also regarded as foreign invested enterprise (HK free float stake >25%), never paid these 2 taxes before.

Adds, biggest losers large engine-size auto makers, because new taxes mainly based on sum of engine-size based consumption tax, VAT.

With most cars from large-engine BMW JVs, house says Brilliance China Auto (1114.HK) should suffer most (14.6% earnings cut), while GAC (2238.HK), Dongfeng (0489.HK) at 14.5%, 9.3% respectively.

Brilliance down 4.0% at HK$6.44 midday, GAC tumbles 7.3% to HK$11.88 on top of 5.9% fall Friday, Dongfeng down 5.5% at HK$14.66.


Source: Dow Jones Newswire

[winston]

Not vested. And would this also affect steel, iron ore, coal and oil ?

Chinese Auto

DJ MARKET TALK: China Auto Stks Fall; Sit Aside For Now - UOB

1111 [Dow Jones] China auto stocks are taking a heavy beating due to policy uncertainties after Beijing's municipal government announces harsher-than-expected measures to curb car ownership in the capital city.

Dongfeng Motor (0489.HK), Brilliance China Auto (1114.HK), GAC Group (2238.HK) and Great Wall Motor (2333.HK) are all down at least 5%.

UOB KayHian analyst Ken Li says the new quota of 240,000/year for Beijing is only around one-third of new car licenses issued this year; "auto sales in Beijing will definitely plunge in 2011."

He suggests investors sit aside for the time being and if they want to do bottom fishing, adding "high-end players should be the first choices," such as Brilliance China, which makes BMW sedans.

Brilliance China is down 6.8% at HK$5.45 on top of 3.8% fall yesterday.


Source: Dow Jones Newswire

[winston]

Not vested

DJ MARKET TALK: UOB Cautious On China Auto Sector 2011 Outlook

0942 [Dow Jones] UOB KayHian remains cautious on the 2011 sales outlook for China's auto sector.

It says the strong growth in January (passenger vehicle sales rose 17% on-year) can be attributed to the extraordinarily strong sales in December when buyers rushed to purchase cars ahead of the cancellation of a tax concession end-2010, as some automakers tended to defer the booking of sales from December to January of the coming year, if year-end sales were strong.

"January was a high season, as people like to buy cars right before Chinese New Year.

However, we expect sales for February to fall 35% on-month from January, due to the Chinese New Year holiday."

For 2011, the house expects auto sales in China to grow not more than 10%, based on the roll-back of policy stimulus, restrictions on car registrations by Beijing and 2010 being a high basis of comparison.

It keeps China auto sector Underweight.


Source: Dow Jones Newswire

[winston]

If this is Real it Will Crash the World by Joshua M Brown

There's a company in Japan claiming to have invented a car that runs on nothing but water. This has to be a hoax because, if true, the entire world market will collapse.

More on that in a second, first here's what they're saying about that car at a site called Press Core:

Japanese company Genepax presents its eco-friendly car that runs on nothing but water. The car has an energy generator that extracts hydrogen from water that is poured into the car’s tank.

The generator then releases electrons that produce electric power to run the car. The electric powered car can run on any type of water (you can even use tea and soda…etc).

The car can run for an hour at about 50 miles per hour on just a liter of water; about 2 cans of soda worth. Genepax, the company that invented the technology, aims to collaborate with Japanese manufacturers to mass produce it.

According to the story, Japanese automakers are going to partner up with Genepax to make Toyotas and Nissans that run on only water.

http://www.thereformedbroker.com/2011/0 ... the-world/

[profittaker]

Source: http://www.reuters.com/article/2011/04/12/us-autos-production-idUSTRE73B07E20110412?feedType=RSS&feedName=businessNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FbusinessNews+%28News+%2F+US+%2F+Business+News%29

Japan supply uncertainty looms for Toyota

(Reuters) - Toyota Motor Corp (7203.T) on Monday warned that the uncertain supply of parts from Japan could threaten its output of vehicles through July, the latest sign of trouble for the global auto industry stemming from the massive Japanese earthquake a month ago.

Ford Motor Co (F.N), meanwhile, said it would slow or shut down production in Asia in the last week of April and into May at its factories and joint ventures in the region, a step it said it did not expect would cut into second-quarter earnings.

The evidence of deeper and long-running output disruptions because of a shortage of key parts -- including semiconductors -- from Japan comes as major automakers grapple with complications caused by parts factories that have been shuttered or are running with limited power in Japan.

[winston]

China Auto Market

SAIC Motor Expects Sharp Slowdown in China Vehicle Market

SHANGHAI (Reuters) - The outlook for China’s car industry had turned to neutral from positive, weighed down by factors such as rising inflation and weaker consumer confidence, the top executive of SAIC Motor Corp <600104.SS> said on Friday.

Source: Reuters

[winston]

Time to print more money....

US Auto

US May auto sales dip as price strategy backfires

DETROIT - Car sales sputtered in May, slumping to levels that were much lower than expected as higher vehicle prices led consumers to put off purchases in the face of a weakening economy.


Source: Business Times