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China’s commercial vehicle market reaps a harvest in 2010

China’s commercial vehicle market achieved an overall growth in 2010 with heavy-duty trucks exceeding, for the first time ever, 1-million-unit market in sales. According to China Association of Automobile Manufacturers (CAAM), China produced and sold 4.37 and 4.3 million units of commercial vehicles (including trucks, buses and semi-tractor trailers, as well as truck and bus chassis) last year, up 28.19 and 29.9 percent from 2009.

As CAAM data show, over 3.86 million units of trucks were sold in 2010, up 30.47 percent compared with 2009. Heavy-duty trucks saw a 59.93 percent year-on-year increase with 1.02 million sold last year, up 42.22 percentage points in growth margin from 2009. Sales of mini trucks stood at 612,100 units, up 19.9 percent, and the number for medium trucks amounted to 271,800 units, increasing 4.94 percent yet down 19.62 percentage points in terms of growth margin. Light trucks had a 26.13 percent sales growth with 1.95 million units sold, a 3.85 percentage points decline in growth margin compared with 2009.

 

Light truck market in the first 10 months

Sales of light trucks (including chassis) reached 1.62 million units in the first 10 months of 2010, up 28.46 percent over the same period of the previous year. Sales volumes of light trucks and chassis were 1.51 million and 110,000 units, up 27.04 and 51.99 percent respectively year-on-year.

In January-October 2010, there were six main enterprises engaging in light truck chassis production, including DFM, FAW and Qingling Motors. Light truck manufactures amounted to 34 firms in the first 10 months of last year, four less than the same period in 2009.

The top 21 light truck manufactures took up a total of 98.5 percent of the light truck market, a slight increase compared with 2009’s 98.1 percent. YTO Group dropped from 2009’s 21st to the 24th on the list of 2010 with only 3,070 units sold through to October, a 51.78 percent decline year-on-year. On the other hand, Zhejiang Feidie Automobile skyrocketed 461.59 percent by dealing out 15,400 units and jumped to the 21st in the rankings from last year’s 24th, taking the top spot in terms of increment speed in the light truck market. 

Beiqi-Foton won in light truck sales by dealing out 372,900 units through October, outdistancing JAC which sold 218,200 units. Though JAC had a big sales gap with Beiqi-Foton, it bested third place DFM by 27,300 units after increasing sales 34.09 percent with 154,700 units sold in the first ten months. Compared with the same period last year, the top three companies saw their market share go down from 45.52 percent to 43.36 percent. While respectively holding 55.31 percent and 75.27 percent of the market, the top five and the top ten manufacturers both saw declines of 1.63 percent and 1.78 percent. 

It is predicted that light truck industry may see a 115 percent increase in 2011, and market growth should remain above 10 percent between 2012 and 2015. Also worth noting is that sales of high-end light trucks reached more than 100,000 units in 2010 and took up 8-9 percent market share of the whole light truck industry, almost doubling its 5 percent share and 50,000 units sold in 2009. JAC targeted 30,000 units in sales for its high-end light truck Shuailing in 2010, ultimately selling 15 percent more than its 10,000 units sold in 2009, which had only contributed to 10 percent of JAC’s light trucks sales last year.

The rapid economic growth gets most of the credit for the growing demand for high-end light trucks in China. The soaring road freight traffic requires more efficient and economical transport. In addition, policies such as charging by weight and the implement of State Ⅲ and State IV emission standards all stimulated the transformation from economical low-end to the high-end models in the light truck industry, especially in Tier 2 and 3 markets. Furthermore, as opposed to price–the factor that individual buyers used to value the most–fuel efficiency, performance, comfort, safety and lifecycle of light trucks became  key considerations in light truck purchases.

Up to now, medium and low-end light trucks occupied about 90 percent of that market. But high-end models may increase in number at a rate of 20 percent every year to adapt the market demands. With regard to capacity tonnage, most of the current city light trucks have capacities of 2.0 -2.5 tons. And the number of light trucks with a 3 ton capacity is expected to rise in the near future.  Nevertheless, models with a lower capacity of 1.5-2 tons will keep increasing at a rapid pace as they replace agricultural vehicles.

Along with the enlarged light trucks amount, the retaining number is expected to reach 15 million units by 2015. Also, China will continue to promote the restructuring in light truck industry so that three to five big conglomerates may emerge in the future. Due to the weakened global economic crisis, export volume has had substantial growth in 2010 and it will keep a 10 percent rate of increase in the next five years. 

Medium truck market with stable performance

Statistics from CAAM reveal sales of medium trucks reached 271,800 units in 2010, up 4.94 percent year-on-year. For the past few years, the growth rate in production and sales of medium trucks has been decreasing, but demand is stable thanks to their advantage in short and medium distance transportation. A lot of heavy-duty truck manufacturers launched some competitive medium trucks to expand their product structure with the intention of taking a greater market share. On the other hand, some light trucks such as JAC Weiling III have been transformed to medium models after upgrading their tonnage capacities.

The top three medium truck manufacturers in sales in the first three quarters were DFM, FAW and JAC, with sales increase of 54.51, 16.4 and 78.55 percent respectively. 

The bus market in 2010 

The bus industry expanded 25.14 percent by dealing out 443,100 units last year, and its rate of growth edged up 21.19 percent. Sales of large buses grew significantly, reaching 68,800 units and jumping 45.87 percent compared with 2009. Light buses followed with a growth of 26.2 percent by achieving a sales record of 284,400 units. Rising 9.68 percent with a sales volume of 89,900 units were medium buses.

In the single month of December 2010, large buses still took the first place in terms of growth with production and sales reaching 8,313 and 8,457 units, respectively up 48.41 and 48.39 percent year-on-year, and up 36.19 and 45.81 percent month-on-month. Output and sales of medium buses were 6,986 and 7,387 units in the month, an increase of 23.22 and 21.92 percent, compared with the same month in 2009. Light bus market saw 27.64 and 29.99 percent year-on-year growth in production and sales, with volumes amounting to 23,289 and 18,516 units in December.

Over recent years, diesel light buses have become the mainstream products in the market and their market share keeps growing. High quality and fuel-efficient light buses are also in high demand as consumers add more considerations in their bus purchases. In the market, high-end light buses with large capacity are mainly diesel-powered models, while most mid- and low-end buses are Japanese technology-based Haise models. Priced between ¥60,000 ($8,823) to ¥80,000, they take the lead in tier 2 and 3 markets for logistics services.

Brilliance-Jinbei, JMC and NAVECO are the three leading companies in the light bus industry. In the first three quarters, Brilliance-Jinbei experienced a 27.44 percent year-on-year growth by dealing out 61,800 units. But its sixth generation Haise only contributed 7 percent to the total sales, with the fifth generation Haise taking up 90 percent.

Sales of JMC’s diesel light bus Transit reached 38,000 units during January-September, soaring 63 percent over the same period of 2009, and its new generation high-end Transit also performed well, having 9,164 units sold in the first three quarters.

NAVECO realized a sales volume of 25,000 units in the period, up 46 percent year-on-year. Its Turbo Daily and Daily, the main light bus models of NAVECO, jumped 32.9 and 64 percent, respectively, with 13,000 and 12,000 units sold in the first nine month of 2010.

Outlook for bus market in 2011

As predicted by industry analysts, China’s economic development in 2011 will keep almost the same high growth as in 2010 and the GDP increase rate should be 10 percent. To control the overheated economy in 2010, China may implement a tightened monetary policy in 2011, which will have some negative impact on the bus market. But infrastructure investments, especially on road construction projects, will be increased gradually in the second half of the year. Accordingly, China’s bus market in 2011 will grow at a low pace in the first half, but speed up in the second half with annual sales increase by 3-5 percent, said Hu Jiandu, a market research expert at King Long United (Suzhou).

Liu Ming from the economic consulting department under the State Information Center said China’s continued urbanization, especially the emergence of satellite cities in the next 5-10 years, will largely expand people’s travelling distance. As a result, demand for buses will rise by a big margin.

In 2011, the government is expected to release more policies and regulations on energy-saving and new energy vehicles, which will greatly promote the development of new energy buses. The implementation of State IV emission standards nationwide in the future will also force the bus industry to develop more green and environmentally friendly buses.

In bus export, with gradual rebound of global economy, auto markets overseas have started to revive, and demand for China’s large and medium-sized buses will be going up. On the other hand, the establishment of free trade areas with foreign countries will also bring opportunities for China’s bus export.

However, due to the release of demand on highway buses and the excessive consumption of touring buses in 2010, sales of these two types of buses in 2011 will remain the last year’s level or below, according to industry experts.

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