CRRC Corp Ltd., a Chinese train wagon supplier, is headed for a restructuring plan due to decreasing demand in the local market, Caixin.com reported.

CRRC has recently established a task force to restructure its assets and businesses, mainly by re-allocating its resources into its two subsidiaries, Qiqihar Railway Rolling Stock Co. Ltd. and CRRC Yangtze Co. Ltd., according to the report, which cited an unnamed source in the company.

The restructuring plan is aimed at helping reduce excessive capacity in the train wagon manufacturing sector while better utilizing CRRC’s resources. It will include a reduction in production capacity.

Over the last few years, China’s train wagon sector has been suffering from excessive capacity due to previous reforms in the country’s railway networks.