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Policy stirs the heavy truck market
According to Xu Changming, director of the Information Resource Development Department at the National Information Center, the sharp drop in China's heavy truck sales in 2005 was a "rational return." He explained that the surge in 2004 was largely driven by macroeconomic policies. "It was not a real market-driven growth," he said, suggesting that the slowdown in 2005 was natural after such a high.
Many industry insiders agree that government policies played a key role in the decline. They point to two main factors: macro-control measures and regulations on overloading. These policies were designed to stabilize the economy and manage demand, but they also had a direct impact on the heavy truck sector.
Dongfeng Commercial Vehicle Corporation’s Tong Dongcheng noted that in 2004, production and sales of medium- and heavy-duty trucks reached 370,000 units, far exceeding initial forecasts. He believed this represented an artificial peak, which inevitably led to a correction in 2005. "Consumer demand was pulled forward in 2004, leading to a drop in 2005 due to policy influence," he added.
Wang Zhanchao, another industry expert, highlighted how national macroeconomic control affected the heavy truck market. He pointed out that with GDP growing at 8.5% in 2004, demand for energy—especially steel—rose sharply, pushing prices up. This prompted the government to implement stricter controls, particularly in real estate, where developers became less active. As a result, fewer construction projects meant lower demand for heavy trucks.
While long-term regulation can create a stable environment for the auto industry, short-term impacts are significant. The automotive sector is highly dependent on upstream and downstream sectors like fuel, raw materials, and credit. A slight slowdown in GDP growth could further dampen auto market growth.
Another major factor was the relaxation of power restrictions. Tong Dongcheng explained that after the government eased rules on engine power, users shifted their preferences toward more fuel-efficient models. This change in demand left many manufacturers struggling to adjust.
FAW Xichai, a key supplier to FAW Jiefang, faced challenges as customers preferred lower-power engines. According to You Wei, the company found it difficult to sell high-powered models. Additionally, the government’s push for a resource-saving society reduced coal transportation, further impacting heavy truck demand.
Experts also pointed out that companies had overestimated the market. Despite the downturn, the heavy truck market remained heavily influenced by policy. Misinterpreting these policies posed a major risk for businesses.
In 2005, total heavy truck sales dropped to 179,781 units, down 29.46% from 2004. Output fell by 33.48%. Among the top seven producers, five saw year-on-year declines in output, and four experienced similar drops in sales.
Xu Changming described the shift in the auto market as a move from "dual power" to "single power." Heavy trucks, once a key driver of growth alongside passenger cars, lost their momentum. "Heavy truck sales in 2005 returned to 2003 levels," he noted.
Interestingly, three companies—China National Heavy Duty Truck Group, Shaanxi Auto, and Chongqing Hongyan—saw increases in sales. All produce Steyr-based trucks, which remained popular. Sales of Steyr trucks rose by 16.89%, with Shaanxi Zhongqi and Chongqing Hongyan also seeing growth.
Wang Zhanchao of Shaanxi Hande Axle confirmed that Steyr models continued to dominate the market. Their platforms remained strong, and products were well-received by consumers.