China has been closing idled auto output capacity, industry body says

CHINA’S auto factories had a capacity utilisation rate of more than 70 per cent in 2023 and idled capacity is being closed, a senior official of the China Association of Automobile Manufacturers (CAAM) said on Wednesday (Apr 10).

Such closures should help the capacity utilisation rate improve faster, according to Chen Shihua, CAAM’s deputy secretary-general.

His comment comes as China’s electric-vehicle sector has been criticised by officials in the US and Europe for exporting overcapacity, as Chinese automakers increasingly look to sell abroad.

In similar remarks on Tuesday, Cui Dongshu, secretary general of the China Passenger Car Association, said that “China’s new energy vehicle sector has yet to reach severe overcapacity levels”.

Reuters has previously reported that China’s state planner, the National Development and Reform Commission, has been cautious about approving new electric-vehicle production plans by all automakers because of concerns about overcapacity and a deepening price war launched by Tesla, according to executives at rival companies and analysts.