(Yicai) March 31 -- China plans mergers and restructurings in its state-owned auto sector to consolidate the industry and boost its competitiveness, according to a deputy director of the commission that oversees the country’s state-owned enterprises.

To hasten the creation of globally competitive auto groups, key resources in research and development, manufacturing, and market advantages need to be pooled, Gou Ping of the State-owned Assets Supervision and Administration Commission said at the China Electric Vehicle 100 Forum over the weekend.

The restructuring will promote internal talent integration, improve resource allocation efficiency, and encourage greater cooperation between centrally controlled SOEs and other businesses, Guo noted. The new groupings will have independent core technologies and lead the shift to smart connected vehicles, he added.

The SASAC controls three state-owned carmakers, namely FAW Group, Dongfeng Motor Group, and China South Industries Group, the parent company of Changan Automobile.

FAW’s shares [SHE: 000800] fell 0.9 percent to close at CNY8.09 (USD1.12) each in Shenzhen today, while Changan Auto [SHE: 000625] rose 0.9 percent to CNY13.03. In Hong Kong, Dongfeng Motor’s stock [HKG: 0489] jumped 4.9 percent to end at HKD4.74 (61 US cents).

Early last month, Dongfeng Automobile, Dongfeng Electronic Technology, and other listed units of Dongfeng Motor revealed possible changes to their indirect controlling shareholders, while Changan Auto, Dongan Auto Engine, Great Wall Military Industry, Jianshe Industry Group, and other firms under CSGC, said their owner had notified them of plans to restructure with other SOEs.

The move will help concentrate resources, accelerate innovative breakthroughs, enhance the overall competitiveness and influence of the Chinese auto sector, and contribute to improving the industry’s quality and efficiency, according to Liu Xingguo, senior researcher at the China Enterprise Confederation.

Disorderly Competition

Some car producers are sacrificing profits for market share, which results in disorderly competition as they resort to practices such as false advertising and malicious slander, Zheng Bei, deputy head of China’s National Development and Reform Commission, said at the forum over the weekend.

This not only leads to a short-term drop in profits, but over the long run undermines technological innovation, product quality and safety, and weakens industrial competitiveness, she added.

The NDRC will implement systematic measures to address market chaos, regulate illegal practices, uphold fair competition, strengthen price monitoring, guide industry self-regulation, and expose typical cases of unfair competition, Zheng said. Strict market supervision will also be enforced, particularly to ensure that products meet technical standards and safety requirements, she said.

Automakers should shift their competitive focus from price wars to improving quality and services and following sustainable development paths, Xin Guobin, vice minister for industry and information technology, also said at the forum.

Consumption Potential

Sales of consumer goods through the government’s trade-in subsidy policy have exceeded CNY1.3 trillion (USD179.2 billion), with cars accounting for over CNY950 billion (USD131 billion), or 73 percent, according to data shared by Commerce Vice Minister Sheng Qiuping.

More than 1.77 million applications had been made this year as of March 28, after 6.8 million vehicles were traded in through the program last year, about four million of which were new energy vehicles, he said.

NEV sales surged nearly 36 percent to 12.87 million last year. The ministry said the NEV market will also grow rapidly this year, with further efforts planned to address bottlenecks.

Editor: Futura Costaglione