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Truck manufacturing


Truck manufacturing

The production and sales numbers of the major manufacturers of trucks for the first six months of 2002 are recorded by category in Table 6.3.3. Year-on-year percentage changes are also detailed.

Mini-trucks

Of the five mini-truck manufacturers listed, the three leaders “ Liuzhou Wuling Auto (38.3 per cent), Chana Auto Group (22.4 per cent) and Changhe Aircraft Industries (17.3 per cent) “ together accounted for 78 per cent of the market. In the first half of 2002, Changhe Aircraft Industries registered a 77 per cent increase in sales.

Light trucks

13 major manufacturers are listed in this category, of which the top four, each selling more than 40,000 units annually, account for 59.4 per cent of the market. Their individual market shares are BAIC (28.3 per cent), DFAC (14.6 per cent), Nanjing Auto Group (8.3 per cent) and Jiangling Motors (8.2 per cent). All four leaders recorded year-on-year sales increases of more than 25 per cent.

Medium trucks

The two industry leaders, DFAC (46.1 per cent) and FAW (32.8 per cent) dominate the medium truck segment, although the latter's sales slipped by 28 per cent in the first six months of 2002. Two smaller manufacturers, Nanjing Chunlan Auto. and Chengdu Wangpai, together accounting for about 8 per cent of the market, both advanced rapidly with nine-fold and forty-fold increases.

Heavy trucks

At the top end of the truck sector, FAW (50.5 per cent) and DFAC (33.6 per cent) again predominate. The next two heavy truck manufacturers, China National Heavy Duty Truck Corp (CNHTGC) and Chongqing Heavy Vehicle Group (CQHVC) account for market shares of 5.2 and 4.4 per cent respectively. All four, together with the fifth ranking heavy truck manufacturer, Shaanxi Auto Industry, registered year-on-year sales growth above 90 per cent in the first six months of 2002.



Impact of China's WTO entry

The stages in which import tariffs and localisation requirements will be gradually reduced under the negotiated terms of China's entry to the WTO were summarised at the end of Chapter 6.1 and again in Table 6.3.4 The same comments offered in Chapter 6.1 in relation to the impact of the relaxation of restrictions in foreign company operations of automobile manufacture apply equally to the manufacture of buses and trucks . Whatever changes may be brought about to the structure and ownership of the industry and to prices, it is likely that local production will maintain the mainstream of the China markets.

Table 6.3.4: Stages in the reduction of tariffs and local content requirements

Impact

Current

2003

2006

Tariff reductions

Import tariffs for autos:80% “100%

Import tariff cuts phased in equally 15% each year

Import tariffs for autos will be reduced to 25%

 

Import tariffs for auto parts : 40%

 

Auto parts tariffs will fall to average of 10%

Investment and technology

Local content requirements for CBU will be restricted to 40% for Year 1, 60% (Year 2) and up to 80% (Year 3)

Will eliminate policies which restrict foreign automotive companies from importing inputs for production

Significant commitments in transfer addressing concerns about the terms and conditions of investment in China, and the government's role in what should be commercial decisions

 

Foreign ownership is allowed (up to 50%)

Will eliminate and cease enforcing trade and foreign exchange balancing requirements

 

Export success in developed markets for both trucks and buses will depend on the Chinese industry's capability to satisfy foreign technical specifications and safety and exhaust emission standards, in which further alliances with the leading foreign manufacturers will play a crucial role. To date, China has achieved some modest sales of trucks to developing markets in Africa and the Middle East, selling on cost. With buses, they have moved a stage further; for example King Long now have a joint venture in India to build CKJD kits supplied from China. However, penetration of developed markets will require greater product sophistication, especially in the truck sector.