China market in 'downward spiral,' head of Japan lobby group warns

China's vehicle market has shown signs of a "downward spiral" that will eventually hit Japanese carmakers, the chief of Japan's auto association says."There's excessive competition and carmakers are building excessive capacity, and to raise utilization of the plants, they will engage in excessive selling," Fumihiko Ike, chairman of Japan Automobile Manufacturers Association, said last week in a press conference with reporters in Tokyo.Japanese automakers are coming off a record first half in China, cementing a comeback from anti-Japanese protests in 2012. The gains are a bright spot in China, which is headed for its slowest expansion in four years as economic growth moderates.Slow growth has prompted automakers to cut prices, threatening profit margins.Foreign-owned assembly plants in China operated at 94.3 percent of capacity in the first half of this year, according to Sanford C. Bernstein analysts led by Robin Zhu. In previous years when sales were rising fast, foreign plants operated at full capacity.Foreign carmakers will have to accept lower utilization rates in the future, the analysts said.Japanese brands generated a combined market share of 20 percent as of May, matching levels seen before 2012, when political tensions escalated over a territorial dispute, according to researcher LMC Automotive."Japanese car sales are solid now," said Ike, who also is chairman of Honda Motor Co. "But sooner or later, as the overall demand cools, they will be also affected by excessive competition. We can't be optimistic.

China market in 'downward spiral,' head of Japan lobby group warns

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