After years of growth in a row, Chinese medium and heavy truck market suffer dramatic decline since the second half of 2012. The decline rate outnumbers 30%. Is it a cold winter or a rational fall? People hold different opinions on it.
The medium and heavy truck industry is closely related to national macro economy. It is easily to find from research on national macro economic development and industry structure that heavy chemical industry comes in the late period of big projects invested by the state. The industry undergoes deep restructuring. The demands for medium and heavy truck are hard to be the same with previous high growth. In 2012, the demand for medium and heavy truck is 900,000 units. In a long term, the demands will maintain this number or even be less.
In face of decline in demands, Dongfeng Commercial Vehicle realizes this is a rational fall in this market and the road of growing through large scale will not work any more, while the quality is the way to survive.
Seen from regulations of the state on trucks, the requirement on safety, environmental protection and quality is rising. These regulations will facilitate the “fittest survival” in the market.
Application of new technology and materials is another challenge of truck industry. In the past, most technical upgrade is on hardware, while in future, it will be on software. For instance, the application of auto electronic technology and information technology will improve efficiency of vehicle operation and accuracy of monitor and control. Besides, application of new materials will improve reliability and decrease operation cost.
Truck users are also undergoing changes. According to statistics, the haulage cost of China takes up 18% of GDP, while in Europe and US, it is only 8%. There is huge space to shrink the logistic cost. Moreover, the logistics market will be more specific, such as the transport for hazard goods, cold chain, etc.
The profit structure will be adjusted as well. Generally speaking, the complete vehicle company definitely makes profits relying on sales of trucks. However, with the rise in sales scale and costs, such a profit structure is harder to make sure the development and even survival of a complete vehicle company.
The only way to survive for truck industry is to seek for profits in the whole value chain. In terms of marketing, besides sales of complete vehicle, the aftermarket is also a key and the lifespan of users’ vehicle should be centered because it helps customers make profits and bring value. In the commercial field, the quality should be upgraded in order to be more modular and standard. In marketing exploring, both Chinese market and overseas market should advance side by side. In internal management, efficiency should be improved and offset the rising costs in labor, raw materials and energy. At the same time, the current business model should be redesigned and restructured.
