Below market expectations China Heavy Truck sales fell 22.2% in September
China Heavy Duty Truck (Sinotruk) saw a decline in its heavy truck sales in September, with a 22.20% month-on-month drop, falling below market expectations. This marked a failure to sustain the rebound seen in August. Despite increased market volatility, the company is expected to benefit from the short-term advantages of EGR technology in the near future.
On October 15, Sinotruk released its sales report for the third quarter of 2008. The company produced 17,910 units and sold 16,902 units during that period. In the first nine months of 2008, total production reached 67,524 units, while sales totaled 69,419 units, showing year-on-year growth of 12.94% and 29.58%, respectively. The parent company, China National Heavy Duty Truck Group, reported third-quarter production of 23,139 units and cumulative production from January to September of 93,151 units, up 19.89% year-on-year. Sales for the same period were 24,380 units in Q3, with a cumulative total of 94,415 units, representing a 20.52% increase compared to the previous year.
The drop in September sales and production—12.89% and 22.20% respectively—highlighted the ongoing impact of the transition to the National III emission standards. Although Sinotruk's "electronically controlled inline pump + EGR" technology offers better fuel efficiency and cost-effectiveness, the broader economic slowdown has dampened demand for heavy trucks, particularly those reliant on raw materials.
In the short term, the full implementation of National III standards has led to the discontinuation of National II vehicles, significantly affecting domestic truck sales. Additionally, the weight-based toll policy, which had driven demand since 2006, is set to have less impact as more provinces adopt it. By the end of 2007, 20 provinces had implemented this policy, covering 64.5% of the country. While heavy truck sales grew by over 50% in the first half of 2008, the shift to National III standards is expected to slow growth in the second half of the year. The third-quarter data confirms this trend.
Despite these challenges, Sinotruk maintains a competitive edge through its EGR technology. The company produces both EGR and high-pressure common rail models, both compliant with National III standards. However, EGR models offer better fuel economy and oil compatibility, along with a price advantage of 1-2 million yuan per vehicle. As a result, over 70% of Sinotruk’s third-quarter sales came from EGR-equipped models. Currently, only Sinotruk has full EGR technology and production capabilities in China, giving it an early lead over competitors like Weichai Power, which is catching up quickly.
Looking ahead, the long-term development of the heavy truck industry will be driven by factors such as logistics modernization, increased expressway mileage, and rising fixed asset investment. While the National III standards may affect short-term sales, they are unlikely to change the overall trend toward heavier trucks. Sinotruk’s ability to adapt and innovate positions it well to maintain its leadership in the industry.
The company’s semi-annual report showed strong performance, with operating revenue reaching RMB 1.296 billion in the first half of 2008—an increase of 52% year-on-year. Net profit rose to RMB 438.8 million, up 30.59%, with earnings per share at RMB 1.06.
Overall, despite short-term fluctuations, Sinotruk is well-positioned to continue leading the heavy truck market, leveraging its technological advantages and strong market presence.
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