Auto execs punch big holes in 'overcapacity', subsidy narratives

China's auto industry had no overcapacity problem in the recent past and even now automakers have to incentivize component companies to increase their production capacity to meet the soaring domestic demand, said executives from leading vehicle manufacturers at a recent gathering organized by the China Public Diplomacy Association.

"As a vehicle manufacturer, we have been encouraging our component suppliers to increase their production capacity to ensure that our production and sales will not be affected due to high demand. Sometimes, we even provide some financial support ourselves to incentivize them to expand their capacity," said Wang Zhang, chief scientist of automaker BAIC Group.

Wang said that in certain segments of the vehicle sector in China, there has been insufficient capacity and the supply of some high-quality, high-level key auto components remains tight this year.