China heavy truck market analysis in the first 8 months of 2008

I. Market Overview
In the first 8 months of 2008, China heavy duty truck sales volume was 441,079 vehicles increased 33.05%. Aug. sales volume was 33,100 vehicles, dropped a bit compared with last year.

Jul. was a watershed for China heavy truck sales. In the first half year, heavy duty truck demand was high. However, after Jul. truck demand dropped greatly.

Beside effects of macroeconomics, there are several events that leaded to the market boom in the first 7 months. The events are: heavy snow in southern China, raw material price hike, the destructive earthquake in Sichuan Province, diesel price increase and the implementation of National III emission standard.

There are mainly three factors that leaded to the dramatic drop in heavy truck sales in Jul. and Aug. 1. The high demand in the first half year overdrawn truck demand in the second half year; 2.truck buyers need time to study National III trucks;3. The state’s control over Pollution industries during Olympic time reduced truck demand.

II. Sales volume of Major truck makers in first 8 months

The top 7 truck makers in Sales are FAW, Dongfeng, Sinotruk, Shannxi Auto, Foton, Shanghai Auto and Beiben of which sales of Beiben increased mostly.

However, since Jul. sales dropped greatly of which sales of FAW and Dongfeng dropped most. (Following picture is a comparison of monthly increase rate of FAW and Dongfeng)

In the first half year, Sales rate of FAW and Sinotruk kept high which pushed FAW and Dongfeng in the first and second places on the sales rank. However, in July sales volume of FAW and Dongfeng dropped dramatically, about 1/5 and 1/3 of the sales volume in Mar. respectively.

At the same time, sales of companies that sell Steyr trucks dropped also but not as much as FAW and Dongfeng. After a sales decline in Jun. and Jul. sales of Sinotruk and Foton started to rise in Aug. An exception to the industry sales decline, sales of Shannxi Auto kept increasing continually in the 8 months.
(Following picture is a comparison of monthly increase rate of Sinotruk , Shannxi Auto and Foton)