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FAW/Sinotruk/Weichai: The Long-term Positive Trend of the Heavy Truck Industry Remains Unchanged, and Multiple Types of Incremental Opportunities Coexist

Author ：Heavy Duty Truck     Add Time ： 2022-05-19     PV ：

"Long-term positive fundamentals remain unchanged", "replacement increments can be expected", "new energy heavy trucks will grow rapidly"... These are the conclusions of the research and judgment given by the leading enterprises in the heavy truck industry chain.

Recently, FAW, Sinotruk, Weichai Power, Hanma Technology and other enterprises in the heavy truck industry chain released the 2021 financial results. In the annual report and performance presentation, a number of enterprises carefully analyzed the competition pattern and development trend of the heavy truck industry in 2022, and unanimously pointed out that the long-term positive fundamentals of the heavy truck industry have not changed.

Long-term positive trend

From January to April, the overall sales volume of China's heavy truck industry fell by more than 60%. Since May last year, a "12 consecutive decline" has been formed, and the market sentiment is pessimistic. However, the three giants in the heavy truck industry chain - FAW, Sinotruk and Weichai Power maintain a relatively optimistic attitude. They pointed out in their annual reports that even if the short-term market is sluggish, the long-term good fundamentals of the heavy-duty truck industry will not change.

FAW believes that during the 14th Five-Year Plan period, the domestic economy is expected to operate stably, the global economy will gradually recover, which is favorable for product exports, and manufacturing investment will become the main force driving investment growth. Due to the continuation of the epidemic, consumption has not yet fully recovered. "It is estimated that the commercial vehicle market will stabilize at about 4.3 million units per year during the 14th Five-Year Plan period, of which the annual demand for medium and heavy trucks will fluctuate around 1.2 million units. Affected by factors such as the Winter Olympics and the economic recovery cycle, the rhythm of market demand in 2022 is expected to show With the trend of 'opening low and going high', the market has entered a stage of stock competition, which will become the new normal for the medium and heavy truck industry."

The development of the heavy truck industry is closely related to the national economy, and the steady growth of the domestic economy provides strong basic support for the heavy truck industry. Sinotruk believes that looking forward to 2022, from the perspective of the global situation, although affected by the marginal withdrawal of stimulus policies and the slow repair of supply chain bottlenecks, the economic growth rate will slow down compared with 2021. However, with the recovery of the endogenous kinetic energy of the economies of various countries, the global economic recovery is expected to continue in 2022. "From the perspective of the domestic economy, although it is facing the triple pressure of demand contraction, supply shock, and weakening expectations, and under the impact of the epidemic in the century, the evolution of the century-old situation has accelerated, and the external environment has become more complex, severe and uncertain. However, China's economy has a strong resilient and stamina, there are dynamic market players, and the long-term positive fundamentals will not change. Both the Central Economic Work Conference and the government work report have indicated that in 2022, the country will adhere to the general work tone of seeking progress while maintaining stability, and keep the economy operating in In a reasonable range, it is expected to achieve GDP growth of about 5.5% on a high base."

Sinotruk further pointed out that after five consecutive years of market peak, the domestic heavy truck market ushered in a period of adjustment, and the substantial growth dividend brought by industrial policies such as the elimination and environmental protection upgrading began to decline.However, based on China's current economic aggregate of more than 110 trillion yuan, the foundation for supporting the development of the heavy truck industry has not changed."In 2022, the heavy truck industry is expected to sell around 1 million units for the whole year.”

Under the long-term positive trend, during the 14th Five-Year Plan period, China's heavy truck industry will face more intense competition. FAW pointed out that during the 14th Five-Year Plan period, with the decline of entry barriers in the domestic market, the competition between local and international brands in the mid-to-high-end market segment will become more intense. "The Chinese market is dominated by mid-to-low-end products, and the main players are still domestic OEM. Domestic competition has formed a trend of 'domestic competition internationalization' in the mid-to-high-end area. Participants include foreign friends and domestic OEM."

Multiple types of incremental opportunities coexist

Many companies have judged that under the long-term positive trend of the industry, in 2022, there will be various types of incremental opportunities in China's heavy truck market.

In 2022, the new energy heavy truck industry may enter a period of rapid growth, and there are many opportunities in the market. FAW said that in order to meet the overall requirements of the national "dual carbon" strategy, there is a huge pressure on carbon reduction in the industrial and transportation fields. Some areas will introduce more stringent restrictions on the proportion of fuel vehicles, increase the proportion of new energy vehicles, and encourage green travel. "In 2022, the company will focus on the main line of product leadership, optimize the product portfolio, promote the national VI product leadership, accelerate the transition of new energy, and promote the leadership of smart vehicles, etc., and continue to build product leadership."

Sinotruk and Weichai Power also have high hopes for new energy heavy trucks. Sinotruk stated that the state proposed the goal of "carbon peaking and carbon neutrality" to promote the creation of a green and low-carbon comprehensive transportation system, and to adjust and optimize the transportation structure. In 2022, the demand for new energy heavy trucks will further increase. Weichai Power also believes that in 2022, under the influence of the "dual carbon" strategy and advantageous policies such as right of way, environmental protection, and subsidies, new energy heavy trucks will usher in a period of rapid growth.

In addition to the opportunities for new energy heavy trucks, there are also many types of incremental opportunities in the heavy truck industry in 2022. "From the perspective of the industry itself, first, the pressure on environmental protection continues to increase. Under the circumstance that the National III vehicles are basically eliminated, some provinces will accelerate the restriction and elimination of the National IV vehicles, which will drive the growth of some new demand; the second is the continuous increase in the over-control policy. In the segmented markets such as mixer trucks and muck trucks, the demand for lightweight products will be promoted to form increments; the third is that advanced infrastructure investment and active fiscal policies are expected to drive market opportunities for heavy duty trucks; the fourth is export opportunities for heavy trucks. Initiative, China-EU Comprehensive Investment Agreement, RECP and other free trade agreements will further promote the liberalization and facilitation of global trade and investment. Commodity prices are at high levels, mining and infrastructure industries are active, and overseas resource-based countries may usher in a new stage. Global The strong demand for commercial vehicles in the market also brings opportunities for domestic heavy-duty truck exports." Sinotruk said.

In addition, Hanma Technology pointed out that at present, the heavy truck industry has obvious scale and synergy effect, excess capacity, high industry concentration, obvious product homogeneity, and fierce industry competition. The future development trend of the heavy truck industry will have four characteristics: First, change from product price competition to product performance competition; second, heavy duty and lightweight; third, humanization, safety, energy saving and environmental protection; fourth, build a complete heavy truck industry chain.

Confidence is more important than gold. In the ups and downs of the market, there are always some heavy-duty truck segments that shine, giving birth to new hopes and opportunities.