Chinese Car Production Up 30%

Chinese car manufacturers produced 30.5 per cent more cars in May than they did 12 months ago. In May China produced 215,000 vehicles, 10.2 per cent less than in April. Compared with previous growth rates, 30 per cent looks relatively meager. In April 2003 production went up more than 42 per cent and February 2003 saw a staggering 62 per cent increase. To put number this into perspective, figures for March show that UK car production rose by only 7.4 per cent to 163,123 units.

Unmoved by the 10 per cent reduction in China’s production growth and the perceived economic slowdown, market leaders are planning to increase capacity to double its current rate. Volkswagen and General Motors are hoping to produce three million units between them by 2008. In light of this news, market analysts are warning that companies may be drawn into a price war.

Even though China’s economic growth is stabilising, as the car production figures show, it is still growing at a rate of knots. The bad news for tyre producers is that more cars means more tyres, which is sure to drive the price of rubber up.