Since last year, the issue of overcapacity in the automobile industry has been a hot topic, eventually prompting regulatory actions from relevant state agencies. Recently, the "Notice on Several Opinions on the Structural Adjustment of the Auto Industry" was released, introducing stricter entry requirements and project approval conditions for the automotive sector. These measures go beyond just limiting production capacity—they have far-reaching implications for the entire industry. According to economic theory, excess capacity directly affects enterprise profitability and investment returns, which are crucial for business survival and growth. Yet, it's not the companies themselves that are most concerned about overcapacity; rather, it's the government, the academic circles, and media outlets that keep discussing it. Meanwhile, the companies remain relatively quiet, seemingly indifferent. Is this because the authorities are not worried, or is it that the public and observers are more anxious than the actual decision-makers? In reality, silence can be a form of attitude. Many companies don't necessarily agree with the idea of overcapacity but choose not to speak out. They may feel it’s inconvenient or even risky to express disagreement. Their real focus is on what they can do—how to avoid punishment, how to stay ahead. Some even secretly hope that others’ capacities are restricted, giving them an opportunity to expand their own. Over the past few years, strange phenomena have emerged in the economic world. Those who strictly follow rules often miss out on development opportunities, while those who take a different path tend to thrive. When we look at today’s successful companies, many of them were once criticized or obstructed. Even Chery and Geely, now respected names, had their share of struggles. Some companies, like the Oak brand, initially entered the auto industry, then withdrew, only to return later and capitalize on outdated models that were eventually phased out. This shows that sometimes, the more you’re told not to do something, the more you need to do it to succeed. The mindset of companies regarding production capacity is complex. Beyond the rebellious attitude, there's also the so-called “bus principle”: people not on the bus want to get on, while those already aboard prefer to close the door behind them. Companies without projects wish for more entry points, while those with approvals hope for fewer competitors. Less competition, after all, is better. I’ve always been puzzled by the concept of overcapacity in the auto industry. With strict control from government authorities, anyone wanting to enter must get approval. If everything is planned thoroughly, how could overcapacity arise? In contrast, street restaurants operate without macro-control and rarely face overcapacity issues. Since the 1990s, the auto authorities have repeatedly said they would no longer approve new car projects. Yet, new projects continue to emerge. I’m still unsure how more than two dozen car brands outside the “three major and three small” projects were born. Similarly, while we hear constant calls to control production capacity, we never hear about when it was encouraged. It’s clear that overcapacity played a role in the rapid development of China’s auto industry. Without it, we wouldn’t have the variety of cars available today or the affordable prices consumers enjoy. In fact, there is no true overcapacity—sales figures tell the story. Whether the reported capacity is accurate or not, experts argue that “overcapacity cannot be judged solely by sales.” But if not sales, then what is the standard? The term “structural surplus” is often used, implying that some industries are inefficient. However, in a market economy, product structure adjustments should be left to companies. Government intervention tends to be counterproductive, as seen in many historical cases. Fair competition is essential for industrial growth and structural adjustment. No matter the measures taken, we must not undermine the principles of fair competition. As the reporter Cheng Yuan suggests, the future of the auto industry depends on market forces, not excessive regulation.

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