China’s economy is likely to give less support to the heavy and medium truck markets in the short term, despite the government’s efforts to ensure steady economic growth with a ramp-up of tax cuts and infrastructure investment, according to the most recent China Commercial Vehicle OUTLOOK, jointly published quarterly by ACT and China’s State Information Center (SIC). Additionally, while not impacting each commercial vehicle segment every year, structural changes within China’s CV market are expected to exert downward pressure through 2023. The OUTLOOK includes an overview of the China economy and a review and forecast of China’s heavy- and medium-duty truck and bus markets, as well as analysis of OEM market shares within China.
“The replacement of NSIII trucks continues to drive the market and the trend of freight shifting from road to rail will continue to hurt heavy-duty truck demand,” says Robert Perkins, Senior Global Business Consultant at ACT Research. He continues, “That said, we’re also seeing sluggish freight rates, dealers reporting near-capacity saturation in the truck markets, and NEV subsidies that created increased demand for medium and large bus sales in Q1, but which are expected to reduce demand in Q2.”
According to Perkins, “ACT Research anticipates that, in the next 5 years, policies regarding commercial vehicles in China will focus on environmental improvement and safety.” He cautions, “While this will promote product updates and technology shifts, they should not cause the large market fluctuations we experienced in 2016 and 2017.”
When asked about specific market segments, Perkins responds, “The domestic demand for heavy trucks declined about 10% year-over-year in Q1’19, while the tractor market grew more than 6% and the medium truck market ended 2019’s first quarter down more than 26% compared to Q1’18.”
SIC is affiliated with the National Development and Reform Commission of China and is engaged in research on the macro-economy, key industries and information technology.