China’s long-awaited blueprint for vehicle industry development will be unveiled within the next few days and will ease restrictions on foreign carmakers’ operations.
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CBS Marketwatch reported that the China Daily, citing sources, said some of the measures originally planned in the draft policy – such as banning manufacturers from selling imported and domestically-made cars through the same dealership – were dropped after protests from car firms.
But the government will also raise barriers to entry in the industry by requiring that any new project must have investment of at least 2 billion yuan ($US242 million), the report noted.
CBS said foreign branded cars made through joint ventures currently account for 90% of passenger car sales in China, one of the world’s fastest-growing car markets.
Nearly all the world’s top carmakers, including General Motors, Volkswagen, Nissan and Toyota, have been ramping up production in China through an array of joint ventures.
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By GlobalDataThe China Daily reportedly said the government has decided to drop its original plan to force foreign firms to sell imported and domestically-made cars through separate sales channels – that proposal was aimed at protecting the domestic industry from imports, which are expected to rise sharply after quotas are abolished next year and import duties are cut further.
Car companies had protested that this would add significantly to their costs, CBS Marketwatch said.
The report said China still has more than 100 car manufacturers, many of which are either loss-making or are too small to be competitive but are supported by local governments.
Among other loosening measures, the government reportedly will allow foreign manufacturers to hold more than the current 50% ceiling on a joint venture stake if the venture is aimed at the export market and is located in an export processing zone.
CBS noted that Honda already controls a 65% stake in an export-oriented joint venture in Guangzhou with Dongfeng Motor, one of the country’s top three carmakers, and Guangzhou Automobile Group.
The new policy will also allow foreign carmakers – currently restricted to two joint ventures for the same product portfolio – to set up more than two joint ventures if they team up with existing Chinese ventures to take over other companies, the CBS report said.
