China's new rules to restrict car manufacturing

According to a media report, the Chinese government is considering imposing restrictions on car companies investing in new manufacturing plants to increase their production capacities. As per a draft of the policy, the National Development and Reform Commission (NDRC) is looking to restrict not just the conventionally powered cars, but also electric and hybrid vehicles.

According to a study conducted in 2017, China has 14 million vehicles per annum idle capacity out of an installed 42.8 million units.  The country has around 80 different automotive groups and more than 180 vehicle assemblers, most of them running much lesser production than possible.

NDRC would instead prefer carmakers to consolidate this underutilized capacity than allow new projects. Some of the conditions imposed in the draft rules include above-average capacity utilization, R&D spends, plans for electric and hybrid cars, exports, amongst others.

Toyota, Nissan and Geely are some of the manufacturers looking to add capacity while Hyundai is already exploring ways to utilize their idle capacities in China.

Source: Reuters