China’s Auto Industry Shakeout

I have a (Google blogspot) blog called Autos and Economics. My latest post (of a few minutes ago) is on a pending shakeout in the Chinese auto industry. The origins of the industry’s excess capacity include the government’s “import substitution industrialization” policies of the 1980s and 1990s, and ā€“ since 2001 ā€“ a rush by global producers to establish a foothold in what is now (by a significant margin) the world’s biggest market. But despite its size China has too many firms, too many brands, too many factories and too many models. There will be a bloodbath. What is unclear is who will survive. All but 2-3 Chinese domestic brands and the most recent global entrants are in my analysis all at risk. While we’ll focus this term on case studies of the beer and steel industries, my post on Chinese autos has in the background the application of a host of standard economics of strategy models. Read, and if you could, publicize among classmates, friends, workmates, relatives….

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