2015 Seen as Tipping Point in China Capacity Utilization

Carmakers in China are using about 94% of their local production capacity in 2015, marking the first time in several years that utilization was below 100%, according to analysts at Sanford C. Bernstein.

They expect total sales in China to continue to grow. But they describe this year as a turning point, opining that "returns in the market may never be the same."

IHS Automotive has estimated that China's carmaking capacity this year will total 10.8 million more vehicles than are actually sold there. The firm says the number of car plants in China will grow to 140 by 2017 from 123 at the end of 2014.

Analysts have been warning for years about overcapacity in China. Yet domestic and foreign carmakers continue to add more capacity in the country than anywhere else. But the market, which grew 17% in 2013 and 10% last year, is expected to expand no more than 6% in 2015. Sales in June shrank 3%, their first year-on-year decline in more than two years.