China produced 7,671 natural gas heavy-duty trucks in October 2017, up 372 percent from a year earlier, according to the latest factory production certification data from the Ministry of Industry and Information Technology (MIIT).
While the market is still surging, the production volume was 34 percent off from that of September, indicating that the natural gas heavy-duty truck market is showing signs of impact from multiple unfavorable factors.
Monthly growth of natural gas heavy-duty trucks has maintained at a three-digit rate since the beginning of 2017 to date, driven by the surge in heavy-duty truck sales so far in 2017, enlarged price gap between diesel and natural gas, booming coal transport market and other favorable factors. September witnessed the highest yearly increase in natural gas heavy-duty truck production of 713 percent, with a record high production of 11,682 units, while January posted the lowest yearly growth of 257 percent. The yearly rise of 372 percent in October marked the month with the second lowest growth in 2017 and the month-on-month drop of 34 percent reflected somewhat of a cooldown.
One of the reasons contributing to the “slowdown” is the overall cool off of the heavy-duty truck market in general, which also impacted the natural gas heavy-duty truck market. According to data from China Association of Automobile Manufacturers (CAAM), China sold 92,289 heavy-duty trucks in October, shrinking a relatively larger 9 percent from September and rising at a relatively softer rate of 33 percent year-on-year.
Moreover, the industry order demand posted a monthly drop of around 20 percent, indicating weakness in the market which has exploded since last October and a high possibility of year-on-year declines in the remaining two months of 2017. It was mainly due to the policy factors including production limit and shut down for “2+26 cities,” limitations on highway transport of coal in ports and a series of strict policies on environmental protection and control, which influenced new vehicle sales demand in North China and even the Central Plains.
The heavy-duty truck market began to show signs of weakness in Q4, with the same impact on the natural gas heavy-duty truck segment. In particular, the “2+26 cities” environmental restrictions on production and shut down, and limitations on highway coal transport in ports of Beijing-Tianjin-Hebei region and Shandong Province had great negative influences on LNG heavy-duty truck demand in North China and the Central Plains area. According to the 2017 Work Plan on Prevention and Control of Air Pollution in the Beijing-Tianjin-Hebei Region and the Periphery, all coal in the port of Tianjin, Hebei and the Bohai Rim will be mainly transported by rail and ports of the Bohai Rim are prohibited from receiving coal transported by diesel trucks.
Based on the Notice on Strengthening Control of Pollution for Heavy-Duty Diesel Vehicles issued by the Transportation Department of Shandong Province, the Environmental Protection Department and the Public Security Bureau, it is stipulated that since October 1, if diesel trucks are still used for coal transport, the port responsible department will order enterprises to suspend coal loading and unloading operations and complete the rectification within two months. During the rectification period, maritime agencies should not allow coal shipping vessels to work at the port, and the road transport administrative departments should cancel road transport certificates for relevant vehicles. The strict ban on coal transport on port roads, coupled with the “2+26 cities” air pollution control, environmental protection and production shut down, have greatly hindered the development of the natural gas truck market in these core areas.
On the other hand, the rising price of natural gas also hindered the demand for new LNG heavy-duty trucks. As a natural gas heavy-duty truck is much more expensive than a diesel heavy-duty truck, cost can only be saved through the price gap between natural gas and diesel. The rising price of natural gas for vehicles in some regions definitely hindered the purchase enthusiasm of potential users.
<Production of top 11 natural gas heavy-duty truck manufacturers in January-October 2017 (in units)>
Production at FAW Jiefang, Shaanxi Auto and CNHTC top 10,000 units
The natural gas heavy-duty truck market has created a record in spite of slowing down in production and sales in October. In the first 10 months of the year, China produced 74,665 natural gas heavy-duty trucks, an explosion of 543 percent from last year with a net addition of 63,000 units. The natural gas heavy-duty truck market posted a January-August production exceeding the record of 50,000 units set in 2014.
FAW Jiefang remained No. 1 with an accumulated production of 17,710 units in the first 10 months, reaping a yearly explosion of 875 percent and a production share of 23.7 percent. Shaanxi Auto produced 15,776 units in the same period with an explosion of 996 percent, lifting its production share to 21.1 percent. CNHTC ranked third with a production of 10,346 units, surging 664 percent from a year earlier with a production share of 13.9 percent. The top three makers were the only ones with production over 10,000 units in October.
Dongfeng ranked fourth with an accumulated production of 9,673 units, rising a significant 247 percent compared with last year and seizing a production share of 13 percent. Foton took the fifth spot with a production of 5,893 units, up 495 percent with a production share of 7.9 percent. Dayun remained in sixth place by producing 5,275 units, up an amazing 1,533 percent with a production share of 7.1 percent.
C&C Trucks and Hualing took the 7th and 8th places, respectively, by producing 3,025 and 2,011 units, with yearly additions of 285 and 310 percent and production shares of 4.1 and 2.7 percent. SAIC-IVECO-Hongyan ranked ninth with a production of 1,117 units, up 888 percent and ranking second in terms of growth.
Total production and sales are likely to reach 85,000 to 90,000 in spite of a development trend of up in the first three quarters and down in Q4.
(Rewritten by Xu Jun based on author’s article on cvworld.cn)