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China’s heavy-duty market in 2011: sales tumble

China sold 1,232,084 heavy-duty vehicles (heavy-duty and medium trucks, large and medium buses, including chassis and semi-tractor trailers) in the first 11 months of 2011, down 7.54 percent from the same period of 2010, according to CBU-Autostats based on the latest data available from China Association of Automobile Manufacturers (CAAM).

The entire heavy-duty vehicle market moved further into negative growth territory as demand waned, and the traditional slow summer months of July and August, when sales usually drop to their lowest levels of the year, exacerbated the negative growth. The normal golden months of September and October did not provide the usual boost either as sales continued to wither toward the end of the year.

The heavy-duty truck (including chassis and semi-tractor trailer) market continued its slump, experiencing the most severe decrease in sales growth during the period among the different heavy-duty vehicle types (see Table 1) and was the biggest culprit for the downturn of the overall heavy-duty vehicle market. The medium bus market was virtually flat, while the medium truck and large bus markets each grew minimally at only 5 percent.

Heavy-duty and medium trucks accounted for 88 percent of the heavy-duty vehicle market, while the rest belonged to large and medium buses.

Heavy-duty truck market: double-digit drop as predicted
The heavy-duty truck sector, which accounts for two-thirds (66.99 percent at the end of November) of the heavy-duty vehicle market, is estimated to drop by about 14 percent for the year. This in fact is almost exactly what an analyst had predicted more than a year ago. Roman Mathyssek, head of global truck research/advisory at IHS Automotive, said at CBU/CAR’s 2010 Heavy-Duty Seminar in December 2010 that the market would drop by 15 percent in 2011.

Sales in the first 11 months dropped 12.36 percent to 825,410 units (see Table 2). Total sales for the year at that pace may only reach between 870,000 and 880,000 units. The general view of a 15 percent downturn was what many executives at major heavy-duty truck makers had by September, and many of them still hold a rather bleak view on how the market will perform in 2012.

In terms of key vehicle types within the heavy-duty truck category, semi-tractor trailer sales fell almost 28 percent through to November, losing more than 6 percentage points in heavy-duty truck market share compared with January-November 2010. Most of these shares lost were gained by heavy-duty truck whole vehicles, which still managed a double-digit growth on the plus side at 12 percent. But that was more than offset by the tumble in sales of semi-tractor trailers as well as heavy-duty truck chassis. The severe drop in demand of semi-tractor trailers in 2011 can be blamed for the drop in heavy-duty truck sales at several traditional leading heavy-duty truck manufacturers.

Mixed performance among top 10 heavy-duty truck makers
The top 10 heavy-duty truck makers combined to sell just over 790,000 heavy-duty trucks in the first 11 months of 2011, down 12.4  percent year-on-year and accounting for around 96 percent of the market (see Table 3). Despite a double-digit downturn of the total market, not all players saw sales drop. In fact, it was the traditional powerhouses that lost the most ground while relatively new players had surprising surges in sales.

Of the three leading traditional heavy-duty truck makers – Dongfeng Commercial Vehicle Co. (DFCV), FAW Jiefang and China National Heavy-Duty Truck Group Corp. (CNHTC or Sinotruk) – DFCV was the “best” performing enterprise. Although it could not avoid the fate of a negative growth (-4.1 percent), the severity is much less compared with FAW Jiefang and CNHTC, which saw sales drop 31.5 and 25.19 percent respectively, the worst performing among the top 10 players.

DFCV surpassed FAW Jiefang to become the leader in the heavy-duty truck segment for the year, thanks to the Kinland flagship heavy-duty truck, which sold nearly 100,000 units. FAW Jiefang’s slide was mostly affected by its overreliance on semi-tractor trailers (it has 40 percent of the market share in that segment), which lost the most volume in the heavy-duty truck sector as well as problems with pricing strategy. CNHTC, similarly, was affected by the downturn of semi-tractor trailers as well as special-purpose vehicles. The two players lost a combined 10 percentage points in market share compared with the same period in 2010. DFCV, in contrast, gained almost 2 percentage points in market share. Together, the first tier’s combined market share through to November was down 6 percentage points to 55.45 percent compared with the same previous period.

In the second-tier group, Beiqi-Foton surpassed Shaanxi Auto as the No. 4 heavy-duty truck maker, gaining 2 percentage points in market share during the period. Shaanxi Auto lost its growth momentum as well as its No. 4 ranking, a position it had held since 2010. Interestingly, the year-to-date numbers for the two players in 2011 and 2010 were almost mirror images of each other. Both players, however, will again surpass the 100,000-unit sales plateau.

There were changes in the rankings of the five players in the remaining third-tier group. Beiben returned to the No. 6 spot after losing the position to JAC for two months since September, but JAC still had the second fastest growth (43.32 percent) among the top 10. However Beiben’s market share was flat year-on-year while that of JAC increased by 1.5 percentage points. SAIC-IVECO-Hongyan had a positive growth for the eighth position, while Hualing’s sales dropped by more than 12 percent, like the industry average. The biggest surprise of the year was Dayun Motor. The Yuncheng, Shanxi Province-based heavy-duty truck maker that used to make motorcycles saw sales increase 185 percent to more than 12,000 units, thanks to the rise in demand mostly from within Shanxi Province as well as surrounding regions. The third tier had a combined market share of more than 16.63 percent, up more than 3 percentage points compared with a year ago.

Yutong and “Three Dragons” still control large and medium bus sectors
No big changes in the large and medium bus markets as Yutong and the “Three Dragons” – King Long United (Suzhou), Xiamen King Long and Xiamen Golden Dragon – continued their dominance.

In the large bus (excluding chassis) sector, the four players accounted for nearly two-thirds of the market through to November, up 1.6 percentage points from the first 11 months of 2010. Ankai Auto, a subsidiary of JAC, beat out Huanghai Auto for the No. 5 spot thanks to a near 45-percent growth through to November. The top 5 players had a combined market share of more than 71 percent.

In the medium bus (excluding chassis) market, Sichuan-FAW-Toyota (SFTM) had the biggest growth among the top 5 makers. At a near 60-percent clip, its growth was much faster than any of the other players, and market share as a result increased 3.5 percentage points. Yutong had a 17 percent growth and like the large bus market, its sales were more than twice the level of the second player. The performances of the “Three Dragons” were relatively flat, but together with Yutong, the four players accounted for more than 58 percent of the medium bus market.

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