China, truck--China Truck Market Cooling?

China has been one of the beacons of prosperity for engine and vehicle manufacturers over the last two years. And while it remains solid – especially in comparison to many regions – recent information from ACT Research indicates that at least some slight cooling may be occurring in the commercial vehicle segment.

Sales of heavy-duty commercial vehicles were 204,250 units in the third quarter of 2010 and while that was a 16% increase from the third quarter of 2009, it was a 36% decline from the record sales seen of the second quarter of 2010, ACT said. ACT, the Columbus, Ind.-based analyst of North American and Chinese commercial vehicle markets, uses information tabulated by China's State Information Center (SIC).

ACT’s 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%.

According to ACT, inflation is starting to become a concern, although consumer inflation remains well controlled excluding food prices. The cooling of real estate investment is expected to have a direct impact on construction and demand for heavy-duty trucks. Government investment in low-end housing is scheduled to accelerate, which is expected to cushion 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 manufacturers all gained market share in the third quarter, ACT said.

“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.”

Source: Diesel Progress Online