China attracts half of industry's global production investment

David Sedgwick

Automotive News | 2010-5-21

China accounted for nearly half of the auto industry's global investment in new production capacity last year as automakers slashed spending to survive a global collapse of sales.

China attracted $6 billion of the auto industry's $12.8 billion global investment in new assembly plants or plant expansions, according to an annual survey by Canada's University of Windsor.

Investments in Chinese assembly plants declined 23% from 2008, while global investment plunged 54%. In effect, automakers exempted China from a virtual worldwide freeze of production capacity.

"Right now, China is the auto industry's big hope," said Prof. A.J. Faria, the study's author.

According to the survey, the second largest investment target was Brazil, where automakers planned $3.3 billion in expenditures to expand production. In distant third place was Germany, where automakers announced plans to spend $930 million.

International automakers who announced expansion plans in China last year include BMW, Fiat, Ford, General Motors and Volkswagen.

At a time when most automakers have considerable excess production capacity in North America and Europe, nearly every major automaker appears to be pursuing the same BRIC expansion policy.

BRIC, of course, stands for Brazil, Russia, India and China -- the developing nations with the largest growth potential. In 2009, Russia and India did not attract much investment.

But in 2008, the BRIC countries accounted for $18 billion of the industry's global investment of $28 billion.

In recent years, those countries have consistently been among the world's top five automotive investment targets. That trend won't end soon.  "In the next year or so, we won't see a huge investment in North America and Europe," Faria predicts. 

Assembly Plant Investment, in billions of U.S. dollars

            China   World

2009:      $6.0   $12.8

2008:      $7.8   $27.9

2007:      $2.0   $18.5

2006:      $1.1   $19.9

Source: University of Windsor

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