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Heavy-duty truck output rebounds in China
Last Updated(Beijing Time):2007-01-26 15:29

By Liang Guangli

In 2006, having shaken off the downturn of 2005, China heavy truck industry realized its stable and modest growth. From January to October of 2006, 247.1 thousand heavy trucks (with a weight of over 14 tons) had been sold out, and the annual sales volume was predicted to be 300 thousand. Compared with 235.8 thousand in 2005, the growth rate would be over25 percent year on year.

In 2006, heavy truck platform products and quasi heavy truck platform products had the equal shares in the market.


From 2000, the market shares of quasi heavy truck producers decreased by a great margin; the decreased shares was jointly shared by four producers like China National Heavy-duty Truck Group Co., Ltd. (CNHTC), Shaanxi Automobile Group Co., Ltd. (Shaanxi Auto), Beiqi Foton Motor Co., Ltd (Foton), and Chongqing Hongyan Motor Co., Ltd (Hongyan). It's a coincidence that the four enterprises all come from or have close relationship with Steyr platform. For example, the market shares of China FAW Group Corporation (FAW) decreased from 58.90 percent to 21.9 percent, down 37 percentage points; that of CNHTC increased from 4.43 percent to 19.8 percent, up 15.37 percentage points; Shaanxi Auto increased 6.76 percentage points and Foton increased 8.6 percentage points. After four-year changes, till 2006, the market shares of heavy trucks and quasi heavy trucks were almost the same and the sales volume of heavy trucks and quasi heavy trucks were predicted to be about 135 thousand respectively. Therefore the year of 2006 is the year of turning point for the structure adjustment of China heavy trucks: it's clear that the industry tends to produce trucks with large tonnage; heavy trucks will continue to enlarge its market shares in the coming years and demands for quasi heavy trucks will further shrink.

From CNHTC HOWO and Golden Price, FAW AoWei, Shaanxi Auto Delong in 2004 to CNHTC Haojun and Haoyun, Dongfeng Tianlong, Auman ETX, Shaanxi Auto Deyu in 2006, in recent years the replacement of heavy trucks was evidently speeded up. At the meantime, customers began to change from impulsion purchase to more rational purchase, and paid more attention on the inherent quality and performance rather than the appearance and comfort of the lorry cab. The significant change of customers' purchase tendency will directly affect the product development direction of heavy truck producers, who began to focus on the quality elevation and performance improvement of new products. This trend will become more obvious in the heavy truck market competition in 2007.
It will be increase steadily in 2007.

From the view of 2007, the production and sales volume of heavy trucks will increase steadily. Firstly, as China's economy has been developing continuously and steadily, it will support powerfully the truck industry, and will also bring more transportation demands. Secondly, with the fast increase of China's highways and high-grade roads, the rapid development of transportation industry, and the coming policies and rules on fuel tax, long-distance transportation on road is developing towards high speed, intensification and containerization; these all provide a good development environment for heavy truck market. Thirdly, the investment in fixed assets of China will keep a certain growth speed. Fourthly, the traffic will be improved; highways in the east will be concentrated, a network will be built in the middle, and those in the west will be connected; these offer better hardware guarantee to the long-distance transportation of China. Besides, the generalization of charge-by-weight standard on highways around China and the implementation of National III Discharge Standard will greatly promote the stable increase of the heavy truck market in 2007.

What's more, as the overseas development of domestic large heavy truck producers are steadily pushed forward, and the technology of heavy trucks in China is increasingly improved, the expansion of domestic enterprises into foreign markets will be speeded up.

The writer believes, in 2007 the total demand in domestic heavy truck market is about 310 thousand, a little growth over the prediction of 300 thousand in 2006. According to incomplete statistics, in 2007 the planned sales volume of domestic large heavy truck producers has totaled to about 380 thousand, up 23 percent over the prediction of 310 thousand. The competition between producers will no doubt become tough.

Engine will be the focus of competition.

In 2007, the development of heavy trucks in China will still step towards large tonnage, and quasi heavy truck platform users will transfer the interest into heavy truck platform; as a result, the market demand for heavy trucks will continue to be enlarged. To deal with this change, quasi heavy truck platform producers will speed up the replacement of heavy trucks products so as to change the reduction status of market; heavy truck platform producers will perfect the products and make efforts to increase the market shares. Consequently, market concentration will be strengthened and market competition will be tougher. Some small-scale and low-strength enterprises, especially those who were involved in heavy truck production at the peak of heavy truck market a few years ago, will face new challenges.

In 2007, the engine will become the focus of competition between heavy truck companies. The upgrade of heavy truck power will go on; the main competition sector of engine in dump truck will upgrade from below 260PS to 260PS--290PS; that of tractors will upgrade from 260PS--290PS to 300 PS and will become the focus in the whole heavy truck market. In heavy truck industry of China, the top three producers--FAW, Dongfeng and CNHTC have the integrated advantage in terms of the whole trucks and engines; the engine produced by Shaanxi Auto and Cummins with joint venture is expected to come out in 2007; Beiqi Foton also has taken measures to seek for cooperation with foreign engine producers to produce engines by themselves with joint venture; after Chongqing Heavy Vehicle Group Co., Ltd. established joint venture with Shanghai Automotive Industry Corporation (Group) and Nanjing Iveco, engines production also falls into the scope of joint venture. As the nationwide generalization date of National Phase III Motor Vehicle Emission Standards is coming near, engine will become the focus of competition between heavy truck producers in the future years. Who holds the top point in the engine competition for National Phase III Motor Vehicle Emission Standards will lead the active position in the future market. The victory in power system competition relies not only on the inherent features including power performance and quality, but also on the interchangeability level of parts and the generalization of service and maintenance network.

From the view of products, in 2007 the development of dump truck will transfer towards heavy truck platform with large tonnage; the market shares of dump truck of quasi heavy truck platform will continue to be reduced; the market share structure of dump truck will be readjusted. As for tractors, state rules and policies have been guiding the development of tractors towards heavy trucks especially mid- and high-grade heavy tractors; in the first models recommended by the Ministry of Communications of PRC, most of the whole trucks are tractors; this causes a tough competition in domestic heavy tractor market, in which models with over 300 hp becomes the competition focus. As for special trucks, driven by urbanization, special engineering trucks further expand the market space. As the chassis reliability of domestic special heavy trucks has improved continuously, the import volume of chassis of cement mixer from Japan and Korea have decreased by a large margin since 2005. In 2007, domestic heavy truck producers will increase the investment in special trucks market. The competition in domestic special trucks field will be tougher. 
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