To say that the heavy-duty truck market was off to a flying start in the New Year would be an understatement.
According to the latest data announced by China Association of Automobile Manufacturers (CAAM) on February 13, heavy-duty truck sales more than doubled in January from a year earlier, growing 125 percent to more than 83,000 units. These official figures are slightly more than what the manufacturers reported earlier in the month, but the fact of the matter is, the market just had its best January in six years. The last time sales exceeded 80,000 units to start off the year was in 2011.
What was interesting was that every one of the top 10 players in the sector, which account for more than 98 percent of the total market, had double-digit growths and eight of them saw sales at least double over their previous January sales (according to CAAM data).
The same reasons that have propelled the market since last October – policies and regulations clamping down on overloading and oversizing, replenishing of inventory for the coal market and lack of highway transport capacity – are still existent, causing the market to remain in a “gushing” mode.
One important economic index that has been an important driver of the market growth is the PMI index, which has been above 51 since last October. Even with Chinese New Year, January PMI index reached 51.3, the first time since 2012 that the index was above 50 in the month of January. The fact that the PMI index has remained at a high level indicates that heavy-duty truck sales were based on true demand.
In other words, the market performance in January was simply a continuation of rapid growth of Q4 2016.
One caveat worth pointing out however was that January had some sales reported by manufacturers that were really those from December. Case in point is FAW Jiefang, which had sales of more than 20,000 units, tripling those of January 2016 after a surprisingly low December (less than 10,000 units) that saw sales drop year-on-year. This type of wild swing obviously does not reflect true market conditions and is also part of the reason for a big shuffle in rankings: CNHTC and Shaanxi Auto switched places from their previous No. 3 and No. 4 spots, respectively.
As the year progresses, both the rankings and growths will normalize. Q1 may remain strong but January most likely will be an outlier for a year of moderate sales.