China to move forward on auto industry M&A agenda

Further M&A guidelines are being prepared for China’s automobile industry as part of efforts to create strong brands capable of competing across different regions and overseas, state media reported. Miao Wei, vice minister at the Ministry of Industry and Information Technology, said the new guidelines are expected to be published by the end of this year. Despite past drives to encourage consolidation, the industry remains fragmented with over 130 manufacturers and fierce competition at the low end. Miao said the guidelines would clear away some of the policy obstructions to M&As at the regional level. Beijing wants to reduce the number of automakers responsible for 90% of output from 14 to 10 by 2011. The new guidelines are expected to call for two or three firms producing over 3 million units annually and four or five with a capacity of 1.5 million units. Earlier plans specified capacities of 2 million and 1 million units.