Domestic parts suppliers now face challenges from global leaders making inroads in the Chinese market. Wu Changqing / For China Daily

 

Local brands are struggling to keep pace in terms of scale, profitability

Given that China's auto market is projected to grow at a rate of between 5 and 7 percent in the next five years, the gap will likely widen between winners and losers, according to AlixPartners, a global business advisory firm.

Chengdu Motor Show

These findings were reported in the 2013 China Automotive Outlook, which AlixPartners released on Aug 28 in Beijing.

Based on interviews with more than 100 senior domestic and foreign executives in China's auto industry, the report highlights development trends as well as the challenges and opportunities faced by automakers and parts producers.

On the production side, competition for market share in China is intensifying, while overcapacity among local automakers remains a significant issue.

The average capacity utilization rate among Chinese automakers remains below 65 percent, with 80 percent considered necessary to maintain profitability, according to the survey.

Capacity utilization is defined as the percentage of potential production capacity that is actually being utilized at any given time.

According to the study, global brands in China have split into clear winners and losers.

The top brands have consistently strengthened their leading market share, whereas the weaker companies are seeing declining sales or fighting to maintain their position.