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Car Makers in China Fear Lengthy Sector Stall
Wed Nov 24, 2004 11:39 PM ET



By Ben Blanchard
SHANGHAI (Reuters) - The race by global car makers into China has gone from pedal-to-the-metal to pile-up, and experts fear it will take longer than previously hoped for the industry to get back on track.

Bad news continues to roll in -- from falling sales and over capacity to price wars and investment slashing.

Volkswagen's main China venture said sales would dip by up to 9 percent this year and warned that sector capacity already exceeds demand by 20 percent.

General Motors' China CEO Rick Wagoner predicts at least another six months before a turnaround, and Hyundai Motor Co. has warned the market could stay flat next year.

"We were expecting a slowdown, but we were not expecting the slowdown would be as big as it has been," Jean-Claude Germain, PSA Peugeot Citroen's top man in China, told Reuters.

Two months of unsold inventory -- some 300,000 cars -- sits on lots across China, as once-blazing demand growth stalls.