List of struggling vehicle enterprises released

The first list of 48 automobile enterprises urged to undertake reorganization from Nov 1, 2013 to Oct 31, 2015 has been released by the Ministry of Industry and Information Technology.

This follows the issuing of a notice establishing an exit mechanism for struggling automobile enterprises in August.

If the enterprises on the list fail to pass evaluation, they will be "persuaded to quit" from the sector, National Business Daily reported on Thursday.

The ministry will not accept declarations or reports of new products from the enterprises on the list.

If the enterprises pass the ministry's evaluation, they will be removed from the list and allowed to operate.

As for the enterprises failing to pass the evaluation, the authority will suspend their qualification as automobile makers and will not process their applications to rename or change address.

Industry analyst Jia Xinguang was quoted by National Business Daily as saying that the notice in August and the new list of enterprises will promote the reorganization of the automobile industry.

The ministry believes a considerable proportion of the 1,300 automobile manufacturing enterprises are now in a state of shutdown or semi-shutdown, which constitutes the main resistance against the merging and reorganization of the industry.

Some insiders think that purchasing these struggling enterprises will allow potential buyers to obtain the shell resources but turning them around would pose problems.

Major enterprises like SAIC Motor in Shanghai and BAIC Motor in Beijing would not consider these problematic enterprises as purchasing targets, analysts said.

An insider from the Zhengjiang Tianxiang Motor, an enterprise on the list, said: "Judging by the current situation, the possibility for the enterprise to pass the evaluation is very small. If we cannot 'seek refuge' from the other enterprises, we will face the risk of being weeded out."

Several ministries jointly issued a guideline earlier this year and ranked the automobile industry at the top of nine industries for reorganization.