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Due to the low concentration, large investment, high output, and strong driving force of the automotive industry, it has formed a huge attraction for local governments. Blindly launching automobile projects by the government has become an important reason for triggering structural conflicts in the automotive industry.

On October 8, 2016, the Executive Meeting of the State Council proposed for the first time that "in principle, no new traditional fuel vehicle production enterprises will be approved", which means that the number of existing traditional fuel vehicle production enterprises will only decrease and not increase.

Recently, Nian Yong, Director of the Industry Department of the National Development and Reform Commission, revealed that relevant departments are currently drafting the "Opinions on Improving the Management of Automobile Investment Projects", which includes prohibiting the approval of new investment projects for traditional fuel vehicle production enterprises, strictly controlling existing automobile enterprises to expand their traditional fuel vehicle production capacity, and strengthening automobile production capacity monitoring, analysis, and early warning.

Some experts believe that in the first 11 months of 2016, China's automobile production and sales reached nearly 25 million units, with year-on-year growth exceeding 14%. At the same time, the automotive industry already has over 6 million vehicles under construction capacity, and the signs of overcapacity have emerged. The automotive industry is most likely to be included in the new category of capacity reduction.

In the face of overcapacity, strict restrictions have been imposed not only in the traditional automotive industry, but also in the field of new energy vehicles. The reporter learned that there are currently over 200 enterprises applying for new energy vehicle production qualifications. But as of now, only 12 companies, including BAIC New Energy, Changjiang Automobile, Future Automobile, and Wanxiang Group, have obtained pure electric vehicle production qualifications. Industry insiders believe that in recent years, various car companies have expanded their production capacity of new energy vehicles, resulting in a significant increase in production concentration and market share. The strict implementation of entry barriers for new energy vehicles is also a consideration to prevent overcapacity.

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