Overall CV sales drop in China, tractor sales rise 5.93% y/y

Full-year 2014 commercial vehicle (CV) sales in China dropped 6.93% year on year (y/y), according to data from the China Automotive Technology and Research Center (CATARC) sent directly to IHS Automotive. A total of 3,791,324 CVs were sold in China, comprising heavy, medium and light trucks and large, medium and light buses, as well as tractors, bus chassis, and truck chassis.

The largest subdivision of the CV segment, by volume sales, was the light-truck segment, which saw total sales in 2014 of 1,559,520 units, a double-digit decline of 13.53% from the sales of light trucks in 2013, the data show. Medium trucks sales saw a decline of 14.56% y/y, with a total of 150,278 units sold in the year, while heavy truck sales were down 9.56% y/y to 198,944 units. However, mini-truck sales saw growth of 0.23% y/y, with a total 527,751 units sold in the year, making it the second-largest segment by volume sales among the CV segments. Overall truck sales hit 2,436,493 units in 2014, a drop of 10.62% y/y.

Meanwhile, within the buses subdivision, large buses saw sales of 81,427 units in the year, up 2.98% y/y, while sales of medium buses dropped 9.60% y/y to 62,694 units; however, sales of light buses were up 16.86% y/y to a a total of 385,427 units, the highest growth rate of all the CV segments. Buses saw overall sales of 529,548 units, up 10.73% y/y.

Tractor sales grew by 5.93% y/y to 278,990 units, while bus chassis sales dropped 5.46% y/y and truck chassis dropped 7.51% y/y to 468,923 units sold in 2014.

The Chinese vehicle market saw overall sales of 23,491,893 units, marking an increase of 6.86% y/y. Of this total, passenger vehicle sales accounted for the vast majority with 19,700,569 units sold, up 9.89 %, but CV sales hit 3,791,324 units, down 6.93% y/y, but still marking the largest single market for commercial vehicle sales globally.

Heavy trucks

In the heavy-truck segment, the top player is Jianghuai Automobile Company (JAC), which is based in Hefei in Anhui province. The company achieved total heavy-truck sales of 39,833 units in the year, an increase of 21% y/y. JAC beat China National Heavy Duty Truck Company (CNHTC), which achieved sales of 37,892 units in the heavy-truck segment, down by 26% y/y. The third-top-selling company in the segment was Beiqi Futian Automobile Company with sales of 35,361 units, down 5% y/y. Dongfeng Motor's sales were down 12% in the heavy-truck segment with 31,582 units sold; however, the company outsold Shaanxi Automotive, which achieved sales of 25,649 units, down 5% y/y. In sixth position in the heavy-truck segment was North Benz Heavy Duty Truck Company with a sales decline 31% y/y to just 7,945 units in 2014. Overall, the heavy-truck segment has around 24 players.

Medium trucks

In the medium-truck segment, the top volume seller in 2014 was CNHTC with total sales of 32,651 units, an annual increase of 5% y/y. In second place was Chongqing Lifan Automotive Company with sales of 26,529 units, up 15% y/y. Dongfeng Motor was in third place with total sales of 24,828 units, down 19% y/y, while JAC was in fourth place with 11,261 units sold down 26% y/y. In fifth place was Beiqi Futian with 10,383 units sold, down 7% y/y. Sichuan Hyundai Motor Company, previously called Sichuan Nanjun, was in sixth place with sales of 10,822 units in 2014. The segment has a total of around 21 players.

Large buses

In the large-bus segment, Zhengzhou Yutong was the top-selling company in 2014 with total sales of 27,389 units, up 7% y/y, followed by King Long Automotive, which is based in Suzhou in Jiangsu province, and saw sales of 9,431 units, down 9% y/y. In third place was Xiamen King Long, which is affiliated to King Long Automotive but is listed as a separate production and sales company by CATARC, and saw sales of 8,335 units in 2014, down 14% y/y. In fourth place was Xiamen Golden Dragon, which achieved sales of 6,619 units, up 12% y/y. In fifth position was Beiqi Futain with sales of 4,614 units, up 23% y/y. The segment has 28 players.

Medium buses

In this segment, the top player by volume sales in 2014 was Zhengzhou Yutong Coach Company with 25,880 units sold, up 3% y/y, followed by Suzhou King Long, which saw sales drop 11% y/y to 7,033 units, with affiliate Xiamen King Long in third spot with sales of 5,357 units, down 20%. The segment has a total of 32 players.

Outlook and implications

Within the CV segment of China's vehicle sales, the two segments that saw positive sales growth in 2014 were tractors and buses. However, the sales data for the first half of 2014 show double-digit growth in tractor sales. In the first six months of 2014, total tractor sales hit 140,429 units, an increase of 14.89% y/y (see China: 29 July 2014: Tractor sales see 15% growth as overall Chinese CV sales decline in H1). The full-year data show that total tractor sales reached 278,990 units, a 5.93% y/y increase. So, while the segment is still seeing positive sales growth, the rate of growth significantly declined in the second half of 2014.

To further understand why tractor growth has dropped from an almost 15% y/y growth rate to a 5.93% growth rate, we need to look at the players within the segment and the forces at play in the market. The tractor is the unit that pulls a trailer, and generally the tractor is a sub-segment of heavy trucks, but CATARC lists it separately.

The tractor segment is divided into three segments according to weight: under 25,000 kg, 25,000-40,000 kg, and to over 40,0000 kg. The divisions all saw sales growth in 2014, but the highest growth was witnessed by smaller tractors. Tractors under 25,000 kg saw sales growth of 35.4% y/y to a total of 41,478 units. The 24,000-40,000 kg segment saw growth of 1.05% y/y to a total of 199,135 units sold, while tractors over 40,000 kg saw growth of 7.52% y/y to 38,377 units sold.

Of note from the data in the first half of 2014 is that the heavy-truck segment achieved overall sales growth, but the segment's sales are now in decline. However, the tractor segment continues to see growth in sales in China.

The market forces at work include the new, stricter level-4 emission regulations which are expected to have hit the Chinese market as of 1 January 2015, under which, in effect, no new vehicle sales of CVs are allowed that do not meet the new emission requirements. This regulation was delayed a number of times over a few years, but the government has bowed to pressure to control the high levels of pollution across China.

The top players in the 25,000-kg tractor segment were FAW Group, which saw sales rise 23.63% y/y to 26,267 units, followed by Chengdu Dayun Automobile, which saw sales rise by 85.64% y/y to 13,789 units. Nanjing Xugong Automobile achieved sales of 779 units, putting it in third place, according to the CATARC data. In fourth place was Dongfeng Motor, which saw sales in the segment drop by 52.37% y/y to just 412 units.

In the high-volume 25,000-40,000-kg tractor segment, the top player was Beiqi Futian with growth of 2.24% and a total of 52,710 units sold, followed by Dongfeng Motor with sales of 46,943 units, down 1.05% y/y, and Shaanxi Automotive with sales of 44,600, up 33.86%.

In the 40,000-kg tractor segment, FAW Group led with sales of 26,964 units, up 16.62% y/y, followed by CNHTC with sales of 7,239 units, down 10.79% y/y, and SAIC-IVECO Hongyan with sales of 3,847 units, up 31.39% y/y.

The growth of the tractor segment is attributed to overall long-distance transportation demand, as well as growth in the use of ports across China, which have ramped up demand for tractors used in ports. Consequently, overall, the positive sales growth of tractors is mainly driven by the demand for highly efficient long-distance transportation and demand for port tractor, says Li Jia, head of IHS Automotive's Chinese division for medium and heavy vehicle forecasts.

With the growth of infrastructure across ports in China, demand for machinery to help move vehicles and other cargo is growing, as is demand for products used in the logistics industry. So, while in previous years China’s road construction and rail industries were driving demand for heavier trucks and tractors, the growth of the logistics and port facilities is currently driving CV sales growth, with positive implications for sales of smaller tractors.

The Chinese government’s think tank, the Chinese Academy of Sciences, has estimated that in 2015 China’s top 10 ports will continue to see an overall upward trend in business growth, although the growth rate will be lower than that witnessed in 2014. A number of new ports are also in development, while others are expected to see growth, though at a slower rate than seen in 2014. Shanghai port will have an annual container throughput of 36.81 million twenty-foot equivalent units (TEUs) to 37.17 million TEUs, up 4-6%, while Ningbo Zhoushan port's container throughput is expected to rise by up to 10.5% in 2015.