S&P issues warning on Chinese car market

Frankfurt/Main. Automakers that have manufacturing operations in China face growing risks, warns the international credit rating agency Standard and Poor's (S&P).

Volkswagen, the market leader in China with a 35 percent market share, would be especially hard hit if growth forecasts for the booming Chinese market prove to be wrong.

Hyundai/Kia and Nissan are the manufacturers with the most aggressive investment plans.

"The huge excess in capacity is the main reason to worry," said S&P expert Maria Bissinger.

By 2010 total capacity is forecast to increase to eight million units a year up from the current two million cars produced.

Further factors causing insecurity are legal uncertainties and a tax system that makes it unattractive to transfer profit to a company's home market.

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