Tuesday, February 24, 2009

More Merger Talk in China's Auto Industry

China Digital Times and Gasgoo.com both picked up on an interesting story from today's China Securities Journal. The short piece, appearing on the front page of the Securities Journal is basically a simple recap of the recent stimulus plans implemented in the steel and auto industries, but it contains one interesting sentence containing a bit of new information:
细则明确支持大型汽车企业集团进行兼并重组,产销规模占市场份额90%以上的汽车企业集团数量由目前的14家减少到10家以内
"The rules clearly support mergers and reorganization among the large-scale auto groups. The 14 groups that currently comprise 90 percent of market share will be reduced to fewer than 10."

These are the most specific numbers we have seen to date in terms of what the central government is expecting -- if indeed the "authoritative person" who provided this information to the Securities Journal is truly an authority.

So who are those top 14? I cannot find a complete list of 2008 market shares, but here is a list of 2005-2007 sales of the top 15 manufacturers. These are listed by group (e.g. Shanghai GM and Shanghai VW are combined). Note that the list contains three private automakers, BYD, Great Wall and Geely.



So if at least four or five of the above listed groups are expected to be absorbed into the others, does this mean that companies not on this list may rest easy? Oddly enough, that may be the case, at least during the short term.

However, even though the Central Government appears ready to focus solely on the top 14, the smaller players may want to start making themselves look attractive to potential acquirers.

This industry will look drastically different in a few years.