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Overcapacity is a difficult problem facing China's automobile industry at present. Since China's car market entered a golden period of rapid development in 2013, car companies that saw the potential of China's car market began to continue to expand their production capacity. however, the rapid growth of the car market did not last long. In 2018, the consumer demand for cars suddenly came to a sudden stop, suffering the first decline in sales in the market, making the capacity utilization rate of the automobile manufacturing industry less than 70% in that year. As of June this year, China's car market, which has been declining for 12 months, has not improved, and the pressure on overcapacity has further expanded. So in the face of the continuous decline in the car market, how to digest the excess capacity?

The main reason for the formation of overcapacity is that car companies are too optimistic about the market. Since the reform and opening up, China's economy has begun to grow rapidly. since 2013, China's automobile production and sales have both exceeded 20 million. At that time, China's automobile market was in the golden stage of rapid development. the huge increase in automobile production and sales has made many car companies see the great potential of the Chinese market; excessive optimism about market expectations has led many car companies to invest blindly and continue to expand their capacity reserves. While car companies are still "paving the way" for the rapid growth of the market, thinking that the car market will rise further, the car market suffered its first decline in sales in 2018. Since then, the car market has been in the doldrums. The problem of overcapacity in the car manufacturing industry continues to intensify, and a series of hidden crises are exposed one by one.

Industry insiders pointed out that overcapacity is not a sudden outbreak in recent years, but a long-standing problem. When the market is in a state of growth, it does not mean that the problem of overcapacity does not exist, but that the new capacity input of enterprises is masked by growing sales data, even if overcapacity brings operational cost pressure, it can also be shared by sales growth. However, when the cold winter of the automobile industry comes, the car market continues to decline, and the excess capacity has also brought serious consequences for the car companies: the share of the growth of sales data has been lost, and the operating costs brought by the excessive production capacity of the car companies have increased the burden of the car companies. The bubble of excessive capacity has also been punctured.

In China, overcapacity is mainly divided into periodic overcapacity and overcapacity caused by industrial transformation. For the former, it can be adjusted automatically through the periodic adjustment of the market itself, while the latter is a structural overcapacity in a country during industrial upgrading, which requires the government to speed up industrial upgrading through appropriate guidance. Although our country is transforming from the traditional field to the new energy field, the traditional energy still occupies the dominant position, so the overcapacity in our country can not be regarded as the overcapacity caused by the industrial transformation. it is more due to the overcapacity caused by cyclical reasons such as the decline of the car market.

In this regard, the specific countermeasures to deal with cyclical overcapacity in China are to shut down and merge and release coordination. The so-called closure and merger refers to the closure of factories, the closure of factories, the merger of resources and the transfer of industries, while the release of synergy means that enterprises should give full play to synergy, establish alliances, and learn from each other by strengthening cooperation to achieve mutual benefit and win-win results.

Zhu Huarong, president of Changan Automobile, said that in the next three to five years, the closure and merger of car companies will no longer be new, while most of the marginal car companies will be eliminated. In the face of the uncertainty and complexity of the market, automobile enterprises must integrate and develop in order to achieve win-win results.

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