Nissan Motor Co, unfazed by talk of over-investment in China, on Tuesday opened a joint venture sedan plant - part of a spending spree by auto makers gunning for a piece of the world's fastest growing major car market.
"Yes, over-capacity is a reality," said Miao Wei, chairman of Nissan's 50 percent-owned Dongfeng Motor Co tie-up. He said Dongfeng is adding capacity to meet demand, and called it "natural" that such a booming industry is attracting oversupply.
Miao said his company was having trouble meeting customer demand for the company's Nissan Bluebird and Sunny sedans, which is why he is unfazed by talk of overheating.
"For some companies it's under-capacity. For some companies it's over-capacity. These two situations exist at the same time."
Dongfeng also said it is in talks towards a China tie-up with France's Renault, which owns 44 percent of Nissan.
"We hope that in the future, we will have some kind of co-operation with Renault," Miao said.
China, which is trying to cool an economy growing at nearly 10 percent a year, is expected to unveil measures by next month that will clamp down on easy credit for new auto plants.
"The auto industry is developing so fast that we do need some guidelines urgently," said Miao, who expects Beijing's new policies to back big, profitable car makers, and to encourage a balance between foreign and domestically developed enterprises.
Car sales in China, which is dominated by joint ventures between local firms and overseas giants led by Volkswagen AG and General Motors, rose by 80 percent last year to over two million. Double-digit growth is expected this year.
In the first quarter, 567,000 cars were sold in China, a 44.5 percent increase that many watchers say is unsustainable.