China heavy-duty truck demand declines

Sales of heavy-duty commercial vehicles totaled 204,250 units in third quarter 2010, a 16% increase from third quarter 2009 but a 36% decline from the record sales of the second quarter of this year. The China performance volumes are tabulated by China’s State Information Center (SIC) and published by ACT Research Co LLC.

The recently released China Commercial Vehicle Outlook noted that the only sector to post quarter-over-quarter growth was the medium and heavy bus category. Bus market sales rose 11% year-over-year and 9% quarter over-quarter. Sales of medium-duty trucks declined 2% on a year-over basis. The outlook calls for modest growth from third quarter levels. However, the lower demand in the third quarter reduces the projected growth of commercial vehicles (trucks and buses) for full year 2010 to 41% from 62%.

The report also provides an overview of the China economy and its impact on sales of heavy- and medium-duty trucks and buses, including details on OEM market share. Highlights from the report include:

•Inflation is starting to become a concern, although consumer inflation remains well-controlled excluding food prices.

•The cooling of real estate investment will have a direct impact on construction and demand for heavy-duty trucks. However, government investment in low-end housing is scheduled to accelerate, cushioning the decline in construction related demand.

•The manufacture of heavy-duty trucks is becoming more diverse from a competitive standpoint. The combined market share of the top three manufacturers has fallen from 60% in the first quarter of 2010 to 51% in the third quarter. The number four through seven top manufacturers all gained market share in the third quarter.

“The overall size of the China commercial vehicle market may have hit a peak in the third quarter of 2010,” said Kenny Vieth, partner and senior analyst with ACT. “The forecast for 2011 is for slightly declining demand before returning to a growth pattern in 2012.”