Car prices can also be more decisive

Recently, the Ministry of Industry and Information Technology released the list of the first batch of 48 auto companies to withdraw their early warnings. Enterprises entering this list will be dismissed if they fail to pass the relevant assessment within the specified time. From the notice issued by the Ministry of Industry and Information Technology of the People's Republic of China on the establishment of the withdrawal mechanism for the auto industry, it is not difficult to see that the relevant departments have already begun to solve the issue of excess vehicle capacity, and hope to use an effective mechanism to increase industry concentration.

The ideal is full, but the reality is very skinny. From the actual situation of eliminating backward production capacity in the past, after publicizing the list of companies, it is believed that companies will certainly disappear from the "Vehicle Production Enterprises and Products Announcement." In other words, it cannot be predicted that individual companies may avoid being eliminated due to administrative intervention.

Statistics show that at present there are more than 1,300 vehicle manufacturers of various types in China, including 171 auto vehicle companies, 120 motorcycles, 900 special-purpose vehicles, 135 tricycles and 135 low-speed trucks. Some of these car companies have been in production or semi-discontinued production for many years, with little or no output. In the industry's view, these outdated production capacity will basically not become the object of mergers and reorganizations of domestic auto enterprise groups. Specially publicized management is required for auto companies that cannot maintain normal production and operation, and their rectification is not as straightforward as revocation. Earth is safe."

In fact, behind the individual car companies, local governments are often obstructing the pace of elimination. In recent years, industries that frequently intervene in policies have not only not adjusted their industrial structure, but have also been accompanied by excess production capacity. The reason for this is mostly caused by the excessive intervention of local "visible hands" and local protection.

According to the plan, the concentration of the top 10 companies in China's auto industry will increase from 82.2% in 2010 to more than 90% in 2015. Therefore, policy-led, industrialized elimination should also reduce the rectification period. Otherwise, the longer the time is left for these backward production capacity, the more government-to-business assistance activities such as “Lang-Lang” and “Guojin Mintuo” will be, and the less likely it is to withdraw later in the period.

In fact, the exit mechanism is only a means to optimize the allocation of resources. Market regulation is the best choice to resolve the excess production capacity. However, market regulation still faces certain resistance. So, since the policy has been introduced, it is better to intensify efforts to allow backward production capacity to withdraw as soon as possible so as to fundamentally promote the healthy development of the automotive industry.

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