It will take time for demand in the heavy truck industry to recover

After the Spring Festival is the peak season for infrastructure construction, heavy truck industry also ushered in the "spring", the manufacturers sales data showed a rapid growth year-on-year. However, there has been no apparent rebound in end-user sales of dealers. For the heavy-duty truck market this year, the industry is generally cautiously optimistic that the heavy-duty truck industry will reverse the declining trend in 2013 due to the stabilization of the economy, the progress of urbanization and the upgrading of products, and will usher in low-speed, stable growth in 2013.

Corporate sales data attracts attention

The sales figures released by the heavy truck manufacturers in January are eye-catching. However, people in the industry believe that this is related to the lower base of the same period last year. With the start of construction boom, although the heavy truck industry ushered in the traditional sales season, it will take time for the terminal demand to recover.

The production and sales report of Foton Motor in January showed that the company's production and sales of heavy trucks were 9,265 units and 6,580 units, respectively, an increase of 90.3% and 153.7% respectively year-on-year. China Heavy Duty Truck produced and sold 7,800 units and 4614 units in January. Although output fell 2.5% year-on-year, sales volume increased by 73.85% year-on-year. The data of China Automobile Association also supports the argument that truck sales will pick up. In January, the production and sales of trucks were 247,900 units and 225,400 units respectively, which represented a year-on-year growth of 49.28% and 41.42% respectively.

It is worth noting that heavy-duty truck industry inventories remain at the low level for nearly five years. Industry sources said that more than 50% of the current dealers said that the current inventory does not exceed 1 month. Although the traditional peak season will usher in after the Spring Festival, the dealers' inventory is not drastic, indicating that dealers have become rational in their actions and are cautiously optimistic about the market. Zhang Bing, general manager of FAW Jiefang Automobile Sales Co., Ltd., predicted that the total demand for heavy trucks in 2013 will be around 930,000 vehicles, similar to 2012.

At the same time, sales of heavy truck terminals have not yet seen a significant improvement. A heavy-duty dealer said that in January sales of dealer terminals increased year-on-year, but the year-on-year increase was not as significant as the increase in sales of manufacturers. Even so, compared with the sharp decline in 2012, the stability of terminal sales indicates that the industry situation is improving.

Industry trend is expected to reverse

Although it will take some time for the end demand to recover, but thanks to the economic recovery, many agencies still expect the heavy-duty truck industry to reverse its decline and achieve positive growth in 2013.

According to the data from the National Bureau of Statistics, in January 2013, the China Manufacturing Purchasing Managers' Index (PMI) was 50.4%, which was above the Ronghe Line for four consecutive months. Among them, the new orders index was 51.6%, up 0.4 percentage points from the previous month, the highest point since May 2012. According to industry insiders, the demand for the manufacturing industry continues to warm up, indicating that the continuous upward trend of China’s economy is basically established. In this context, the automotive industry and construction machinery industry are expected to gradually come out of the trough. At the same time, the Yiwu transportation market sentiment index, which represents the income of logistics heavy truck users, increased 16.61% month-on-month in January this year, and the growth rate in November and December 2012 did not exceed 1%.

UBS Securities said that the price of No. 0 diesel fuel, which represents the major expenditures of logistics heavy truck users, has declined slightly in the past two months. In the future, freight prices will increase due to the improvement of excess capacity and the fuel consumption of downstream customers will be relatively stable. The profitability of end users is expected to improve.

Not only that, but also benefit from the acceleration of the elimination of national yellow label vehicles, and the upgrading of the heavy truck industry will drive sales growth. According to statistics from BOCI Securities, in the next few years, registered heavy-duty trucks by the end of 2005 are expected to be phased out, while Beijing, Tianjin, the Yangtze River Delta, the Pearl River Delta and other developed regions will basically phase out heavy-duty vehicles that do not meet the National III standard; plus 2009-2010 sales. The heavy-duty trucks will also enter the renewal cycle, and it is expected that the heavy-duty trucks' demand for scrapping and renewal will be released quickly in 2013. In the medium to long term, urbanization will continue to provide strong support for heavy truck market demand, while the export growth space is still relatively large.

UBS Securities expects that as the macroeconomic recovery is moderate, infrastructure investment continues to increase and the real estate market is picking up, the heavy-duty truck industry is expected to usher in a recovery recovery. In 2013, it is expected to achieve a 10% sales growth.

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