Suzuki to adjust excessive output at China plant image

Suzuki Motor Corp will have to adjust its production capacity in China as at the moment it produces twice as many cars as it sell there. The announcement was made today by the company’s president, Toshihiro Suzuki.

The Japanese automaker has a total production capacity of half of million units at its two assembly plant in the world’s largest auto market, one of which started functioning in April in 2014. Amid a slowing economy, with decreases in demands and high competition, sales have not performed as well as wanted, reaching only 250,000 cars sold last year.

Suzuki is not the only carmaker facing a difficult situation in China and in overall sales, as the Volkswagen Group sales in China went down 5.3% in July due a continuing downturn in the Chinese market.

The second-tier Japanese automaker best known for its small cars however jumped to a record in Tokyo on the stock exchange market at the beginning of this month following an announcement from the hedge fund run by Daniel Loeb.

The Japanese automaker underlined the problem manufacturers in China are facing, with sales going down as the economy is slowing. Investors are concerned that China is actually growing at a slower pace than the official 7% targeted for 2015. However, economists dismiss comparisons of the current situation in China with the 2008 global financial crisis or the crisis that took place in Asia between 1997 and 1998. Analysts at Capital Economics stated that with policy support gathering force, a rebound for the auto market in China is yet likely to take place in the following couple of quarters.

 

By Gabriela Florea