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Heavy-duty truck market likely to achieve positive growth this year

The long depressing Chinese heavy-duty truck market witnessed a solid start in the first quarter this year. According to the latest statistics of China Association of Automobile Manufacturers (CAAM), output and sales of heavy-duty trucks in the first quarter reached 154,900 and 147,100 units respectively, up 0.02 and 9.3 percent on a yearly basis, which was a large increase compared with the 25 percent decrease last year.

Sales of semi-trailers registered 71,000 units in the first three months, taking up almost half of the heavy-duty truck sales during this period.

The product structure adjustment guaranteed the sales growth of heavy-duty trailers, and some enterprises have benefitted from product structure adjustment starting from this year.

The growth of new vehicle sales indicates a recovery of logistics vehicle demand this year.

Higher emissions standards, larger percentage rates of fleets, structural change of transportation products and the increase of labor costs all contributed to higher demand for heavy-duty trucks. For example, the State-IV emissions standards for diesel engine heavy-duty trucks have been officially implemented starting from 2015. The percentage of individual truck owners decreased while that of truck fleets increased. The structural change of transported products requires higher efficiency and reliability. The new generations of truck drivers have more demand on driving comfort, which increased labor cost to some extent.

The rise of average price of heavy-duty trucks multiplied the net profit of single unit of trucks. For example, a low-end heavy-duty truck with a price tag of ¥200,000 ($30,769) may produce a ¥1,000-¥2,000 gross margin. A ¥350,000 medium-end heavy-duty truck, on the other hand, may bring about ¥30,000-¥50,000 gross margin for a single unit. Thus, the structural upgrading of heavy-duty truck demand will bring about large increase of single unit net profit and ratio.

According to heavy-duty truck sales in the first three months, especially that of March, and statistics of other related industries, sales and profitability of heavy-duty trucks will continue to grow for the rest of the year with a fair chance for positive growth for the year.

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