China's auto export industry has been reshuffled with half of the companies that exported vehicles last year denied licenses.

The move aims to force the small players out of the market, prevent cutthroat competition and ensure a healthier market.

Only 480 firms, half last year's number, have gained export licenses for the period starting March 1, 2007, the Ministry of Commerce (MOC) has announced.

Their licenses will be suspended in 2008 if they violate export rules this year, the ministry said.

China's auto exports hit a record high of 340,000 units in 2006, more than double the 2005 figure, according to MOC statistics.

But the industry suffered a price war with many automobiles flowing into emerging markets at razor-thin margins. MOC figures show that the export price per unit plunged near 20 percent year on year by Nov 2006.

Some exporters were too small to compete -- 600 of the 1,025 auto exporters in 2005 exported less than 10 units. A staggering 160 firms exported only one car per year.

The introduction of export licenses will force Chinese firms to guarantee product quality and provide solid after-sale services to prevent further damage to the reputation of the indigenous car industry, said Gao Yugui, public relations director with the Great Wall Motor Company Limited.

Source: Xinhua