Chinese Truck Manufacturers Expand Overseas Markets

Global truck manufacturers are facing increasing competition from Chinese commercial vehicle companies. Chinese companies have not only dominated the domestic market but are also aggressively moving toward export markets - especially in Southeast Asia and Africa.

Alix Partners, an automotive consulting firm, recently announced in a report in Shanghai that in 2009 China’s heavy-duty and medium-sized commercial vehicle production has already approached half of global production.

China's strong domestic demand and continued growth in exports to emerging markets have provided support for China's commercial vehicle industry. In emerging markets, the price of Chinese trucks is less than half that of other global truck manufacturers.

Ivo Naumann, head of Alix Partner's Shanghai office, said that the strong growth in China's commercial vehicle production is expected to continue this year with a year-on-year increase of 76%, making China possibly the first time this year to achieve the output of 1 million trucks.

Alix said that driven by the government's stimulus policies, China is the only major market for growth in car production in 2009, an increase of 22%.

This strong growth momentum has increased the share of Chinese cars in the global market (in terms of production), from 20% in 2006 to 49% in 2009.

Foreign truck manufacturers will benefit from the recovery of demand in Europe and North America, where Chinese trucks do not have a competitive advantage because they do not meet emission standards.

However, in emerging markets, low-tech trucks with low technological content in China have caused international truck manufacturers to face severe competition. Alix expects that by 2014, emerging markets will contribute 58% to the growth in demand for commercial vehicles.

China's commercial vehicle exports (emerging markets in Africa and Southeast Asia) rose by 25% year-on-year to 134,000 units.

“The continuous increase in the output of China (original equipment manufacturers) has brought about higher profitability, and thus R&D departments can also get more investment... This will enable these indigenous OEMs to compete at a global level. ," said Alix's report.

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