700,000 Units HD Trucks Expected to Be Sold in 2013

www.chinatrucks.com: It is predicted that the sales volume of HD trucks will reach 280,000 units in the second half year. 5%-10% growth is expected to see in the whole year and around 700,000 units are expected to be sold in the whole year. Even China 4 standard is not completely carried out, it will be some day. Regarding the new market opportunities, “battles” on new energy and exports have started. Urbanization and infrastructure are engines driving the truck market. The features of China truck industry such as “scattered, small and weak” especially weak core competitiveness still exist. In the global market, the road from being strong and superior and then growing to super power to realize the integration and fusion of enterprises are actual needs now. The level of R&D and technique, key components and materials are legging behind those of European and American companies. The shortage of high level HD trucks, the competitive model of selling products at a loss to attract customers in middle and low level HD trucks, and fragile profits are bottlenecks hindering the development of HD truck manufacturers. The annual sales volume of 1 million HD trucks is only a flash in the pan. The new government takes prudent policies and pragmatic manners, indicating a clear direction for HD market. The success of a HD enterprise is to focus on connotative development, integrate resources in a scientific manner, and grow from being excellent then being strong. 

According to statistics of CAAM, in the first half year, both production and sales end the declining trend of last year. A total of 1.4375 million complete trucks are produced and 1.4606 million complete trucks are sold. Regarding the non-complete vehicles, the production is 259,200 units and the sales volume is 266,800 units, up by 5.70% and 4.76% respectively. Production of semi tractor is 123,200 units and sales volume is 122,200 units, up by 17.75% and 13.35% in respective. 

Sales volume and market share of top 9 HD trucks Jan.-Jun. 2013

Data source: CAAM

Sales volume and market share of top 9 HD truck manufacturers in June 2013

June is normally an off season for trucks, but the HD truck market sees a rise—the sales volume reaches 75,00 units, up by 50.82% year on year, and only 2.84% decrease compared with May (over the last three years, sales volumes in June are all 10% less than that in May).

In the first half year, the total sales volume of China’s HD truck industry reaches 402,700 units.

Seen from the sales volume of each enterprise, Dongfeng alone takes up approximate 25% market share. Foton and SHACMAN surpassing SINOTRUK rank No. 3 and 4 respectively. Despite the top five enterprises remain the same, the overall pattern of the market is changing: Dongfeng sees a rising advantage, SINOTRUK sees a shrinking share, Foton grow fast, and SHACMAN is steadily increasing. Among the enterprises whose sales volume surpasses 10,000 but less than 20,000, North Benz suffers a decrease, while JAC, Hongyan and Valin enjoy obvious growth.

Insiders believe the soaring sale in June is due to the expectation of China 4 standard officially effective on July 1, 2013. According to MEP, China Ⅲ-compliant trucks are not allowed to sell. Based on this policy, some manufacturers and regional dealers conduct a new marketing strategy: to make out an invoice for China Ⅲ-compliant trucks before July to make sure the new truck can get a license plate. Pushed by this overdraft, the HD truck market maintains a good momentum.

Despite a surprising sales performance, the future of HD truck market is sill unknown because the third quarter is an off season, PMI comes to a new low since 4 months, the real economy is sluggish and the manufacturing industry is gloom.

In the first half year, a total of 402679 units of HD trucks are sold, with a bigger growth rate of 8%. 

The sales volume in June is largely thanks to the overdraft of China Ⅲ. In the coming months, such a phenomenon will not happen again. China will be implemented step by step some day.

China’s macro economic development is a real factor affecting China’s HD truck. In the first half year, the HD truck market gets a rise despite the macro economy is weak and the real estate industry slows down, but this will not happen in the second half year. Before long, many big HD truck dealers feel pressure due to cash shortage caused by constrictive money policy.

On July 5, the state council issued guidance on financial support for economic structure adjustment and transformation upgrading, placing a basic tone for the economic trend in the second half year, which means, the currency liquidity is constrictive in general.

A constrictive money policy will exert direct influence on commencement of new projects on fixed assets. The HD truck market will encounter bigger challenge.

The sales growth rate of HD truck market breaks through 8%, but it is almost definite that the market will get reverse. Hence, the sales and production in the whole year will level off the last year.

In addition, the growth rate of national GDP (7.6%) is the lowest over recent two decades. Continuous slowdown of economy will give rise to new crisis, as is agreed by many experts. “Stable growth” is to maintain a stable economy, but based on current situation, the HD market has lost the strongest support—significant macro economic growth. It is less possible to break through one million units.

With respect to exports of HD market, experts don’t hold a positive attitude due to various reasons. Firstly, the international market don’t have huge demands on HD trucks due to severe global economic situation, European debt, slow recovery of American economy, stagnation of Japanese economy and slow growth of emerging countries. Secondly, in 2012, the export volume is huge. Without new projects or other positive factors, the export market is relatively saturated, and it needs time to explore new market. Thirdly, service has been a bottleneck hindering the export of HD trucks. Fourthly, low-price competition makes the overseas market heated. The continuous decline of profits of exports lowers down HD truck manufacturers’ passion to explore new overseas market.

The tight monetary policy spins at HD truck manufacturers. “Shortage of money” and shortage of money bring negative impacts on the sales of HD trucks. Banks slow down loans, depressing users’ enthusiasm on purchasing HD trucks. The shortage of capital affects manufacturers’ investment on fixed assets and ongoing projects. The loans cannot be paid back on time and banks lower down loans. If this bad circle continues to go, the sales of HD trucks will get severe impact.

“July 1 is supposed to be the implementation date of China 4 standard. But it delays again. Before, it has delayed from Jan. 1, 2011 to Jan. 1, 2012, then to July 1, 2013. It has postponed for two and a half year. At a time when China 3 standard was implemented, many auto insiders said proudly that China only took a few years to catch up the standard that developed countries takes 10 years and even 20 years. What shames us is China spends more time to transform from China 3 to China 4 than European countries. From that we can conclude that at a low level, the surpassing at that time refers to the level of products (including imported products), but at a high level, the upgrade can be said to be a test for a country’s industrial level.

China 4 standard is a double sword for trucks. On one side, it pushes the sales of HD truck in the second quarter, but on the other side, the overdraft consumption will definitely affect the sales in the second half year.

Of course every coin has two sides. Competition is to select the superior and eliminate the inferior. China ranks No. 1 in terms of total auto volume. There are 129 complete vehicle factories and around 600~700 assembly factories. Most complete vehicle factories have very low profits, causing to overcapacity for ineffective production and insufficiency for effective production. Therefore, China’s auto pattern keeps changes. When supply is over demand, the market competition is intensive, the survival of the fittest in the market is quite obvious and market concentration is further improved, therefore, big enterprises will realize scale development. Moreover, HD truck manufacturers are expected to carry out effective integration and improve their core competitiveness and development through enlarging market scale, furthering their management and culture, and enhancing their brands, marching towards world top 500.

Insiders agree that pushed by the construction of new urbanization, investments in road transportation and municipal project will speed up in the second half year and the investment in infrastructure will be faster than that in the first half of 2013.

2013 is a year for updating HD trucks, as said by industrial experts. This is good news for HD market. Form 2007 to 2011, the annual sales are above one million, which means, in 2013, there are a huge amount of HD trucks needs to be updated. It will drive at least 5% growth according to statistics. Moreover, there are some other reasons for the rapid growth of HD trucks in recent years as follows:

a. China persists in promoting the reform and opening up, advancing the synchronized development of industrialization, informationization, urbanization and modernization of agriculture, proving a huge market for HD trucks. For instance, the urbanization pushes forward the construction of real estate. As the main tools in the construction, HD trucks also enjoy much growth. Over the past few years, the real estate market becomes hot with the investment growing at double digits, which drives the vehicle industry, especially the HD vehicle market.

b. There will be a huge demand for HD vehicles thanks to the commencement of new projects and construction of ongoing projects according to China’s new round “develop the west strategy”.

c. China’s national economy gets back to normal track and grows at a rate approximate 8% every year. The transportation of raw materials and products needed by industrial growth pushes the development of HD vehicle market.

d. some users who needs vehicles but couldn’t afford the cost starts procurement thanks to the state’s political support, help from insurance companies and the installment payment. Potential users become real users.

e. other factors such as construction of railroads and highways, improvement of road transportation, also contribute to the steady development of HD vehicles.

f. Significant growth of international trade is another strong power driving the HD vehicle market.

To sum up, the HD truck market in 2013 will be steady growth with slight increase.

Sales targets of HD truck manufacturers set up at the beginning of 2013