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China’s heavy-duty market in the first three quarters of 2011: slide continues

China sold 1,038,866 heavy-duty vehicles (heavy-duty and medium trucks, large and medium buses, including chassis and semi-tractor trailers) in the first three quarters of 2011, down 6.37 percent from the same period last year, according to CBU-Autostats V15N9 based on data from China Association of Automobile Manufacturers (CAAM).

The entire heavy-duty vehicle market slid further after nine months after growth moved into the negative territory through five months. 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 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), while the medium truck and bus markets remained flat. The large bus was the only heavy-duty vehicle type to show any significant growth.

There were slight changes in market shares of the four major vehicle segments, as heavy-duty and medium trucks accounted for about 89 percent of the heavy-duty vehicle market, about 3 percentage points less than the level after June. Large and medium buses took up the remaining share, gaining about 2 percentage points.

Heavy-duty truck market: at least a 10 percent drop
The heavy-duty truck sector, which accounts for more than three-quarters (68.57 percent at the end of September) of the heavy-duty vehicle market, continued its slide down the negative path. Despite a better-than-expected September, sales in the first three quarters dropped nearly 10 percent to 712,359 units (see Table 2). With a negative growth assured for the year, the only question remains is by how much. At CBU/CAR’s 2011 Heavy-Duty Seminar held in Beijing in October, Ashvin Chotai, managing director of Intelligence Automotive Asia, predicted a 12 percent drop for the year, while many executives hold the view that the market will decline by as much as 15 percent, just as another analyst had predicted at our 2010 Heavy-Duty Seminar last December.

In terms of key vehicle types within the heavy-duty truck category, semi-tractor trailer sales fell 28.36 percent through to September, losing more than 7 percentage points in heavy-duty truck market share compared with January-September 2010. Most of these shares lost were gained by heavy-duty truck whole vehicles, which still managed an impressive 16.78 percent growth, yet were more than offset by the drastic drop in sales of semi-tractor trailers as well as heavy-duty truck chassis. The severe drop in demand of semi-tractor trailers this year can be blamed for the drop in heavy-duty truck sales at several traditional leading heavy-duty truck manufacturers.

According to the latest data available from CAAM not yet tabulated by CBU, the negative growth in the heavy-duty truck sector worsened during October and the first 10 months. October sales were down 17 percent on-year to about 58,200 units, while sales through to October were down about 10.3 percent to 770,200 units. At this rate, not only will the market not be able to hit last year’s level of 1 million units, it might not even reach 900,000 units.

Top 10 heavy-duty truck makers: winners and losers
The top 10 heavy-duty truck makers combined to sell 683,680 heavy-duty trucks in the first nine months of the year, down 9.85 percent year-on-year and accounting for about 96 percent of the market (see Table 3). In spite of the overall downturn of the market, the performances of the top 10 players continued to be mixed. The traditional leading heavy-duty truck makers were the losers while relatively new players became winners as far as growth and market share are concerned.

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 (-2.4 percent), the severity is much less compared with FAW Jiefang and CNHTC, which saw sales drop 30.16 and 20.84 percent respectively, the worst among the top 10 players. FAW Jiefang and CNHTC’s slide continued to be caused by their overreliance on semi-tractor trailers and special-purpose vehicles, which were hit the most amid the market downturn. The two players lost a combined 7 percentage points in market share compared with the same period in 2010. DFCV, in contrast, was able to withstand the overall market downturn thanks to the performance of its flagship Kinland heavy-duty truck series. Together, the first tier’s combined market share through to September was down nearly 6 percentage points to 55.46 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 process. Shaanxi Auto lost its growth momentum as well as its No. 4 ranking, a position it had held since last year. Both players, however, are expected to see sales top 100,000 units again for the year.

There was a slight reshuffle of the five players in the remaining third-tier group. JAC skyrocketed to the No. 6 spot thanks to a 68 percent growth which was good for the second fastest growth during the period among the top 10 heavy-duty truck makers. The performance also helped it almost double market share from about 2.5 percent a year ago to 4.6 percent. Beiben dropped to the No. 7 spot after experiencing a 14 percent drop in sales. SAIC-IVECO-Hongyan and Hualing did not see any significant growth or decline, and therefore remained as the No. 8 and 9 players. Dayun Motor continued its surprising run as a newcomer, with sales nearly quadrupling to almost 10,000 units from the a-year-ago period, making it the fastest growing heavy-duty truck maker in the industry. The third-tier had a combined market share of more than 17 percent, up 3.5 percentage points compared with a year ago.

Yutong and “Three Dragons” continue dominance in large and medium bus sectors
There were not much change in the large and medium bus (excluding chassis) markets as Yutong and the “Three Dragons” – King Long United (Suzhou), Xiamen King Long and Xiamen Golden Dragon – continued to solidify their market dominance.

In the large bus sector, the four players accounted for nearly two-thirds of the market through to September, up nearly 1.5 percentage points from the first nine months of 2010. Huanghai Auto helped round out the top 5, which had combined market share of nearly 71.44 percent.

In the medium bus market, Sichuan-FAW-Toyota (SFTM) had the largest growth among the top 5 makers, stealing the spotlight from Yutong and the “Three Dragons.” As a result, its market share in the medium bus sector increased nearly 5 percentage points from 8.76 percent at the end of September last year to 13.47 percent this year. But Yutong and the “Three Dragons” still account for nearly 60 percent of the medium bus market.

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