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Invalid production capacity of 147 car companies was withdrawn
From January 24th to February 10th, the National Development and Reform Commission (NDRC) released a list of World Manufacturer Identification Codes (WMIs) that have been granted to various vehicle manufacturers. This announcement includes a total of 147 companies, with 124 of them being permanently disqualified from producing vehicles—covering whole vehicles, modified vehicles, and special vehicles. Additionally, 21 companies hold multiple WMIs, some of which will be revoked, while two others had their WMI approvals for certain vehicle types canceled.
This move is expected to significantly increase industrial concentration within the automotive sector. WMIs are the first three characters of the 17-digit Vehicle Identification Number (VIN), serving as a unique identifier for each vehicle model. They ensure that no two vehicles share the same identification code for up to 30 years, making them essential for tracking and managing vehicles globally. However, it's important to note that WMIs do not reflect corporate ownership. For instance, even though SAIC Motor has acquired Ssangyong Motors, its WMI still reflects its Korean origins. Every automaker worldwide holds at least one WMI to validate the production of their vehicles.
The NDRC’s initiative aims to streamline the auto industry by eliminating inefficient and unproductive capacity. Removing "zombie" companies—those with no real production—is just the beginning. The government plans to conduct a comprehensive evaluation of existing production capabilities and implement stricter macro-control policies, including refining industry planning, enforcing market access rules, controlling new projects, promoting technological upgrades, accelerating mergers and acquisitions, and supporting top-performing enterprises to grow stronger. These steps are all aimed at boosting industrial concentration and long-term stability.
However, this tightening of controls could impact the profitability of the automotive industry, which has only recently started recovering from a downturn. According to recent data from the Ministry of Commerce, the sector began reversing its decline in the second half of last year, largely due to increased production and sales volume compensating for losses from price cuts and rising costs.
Moreover, the government’s strict approach to production capacity adds uncertainty for private investors looking to enter the auto industry. New regulations now prohibit the buying or selling of shell resources, forcing many private companies to seek alternative routes, such as forming joint ventures with qualified manufacturers, establishing branch factories, or partnering with state-owned enterprises to gain indirect access to the market.
Overall, these regulatory changes signal a shift toward a more structured and competitive automotive landscape, with a focus on sustainability and efficiency in the long run.