In 2022, the sales of heavy truck industry may be lower in early months and higher in later months, and overall opportunities in the industry chain are emerging

As of April 6, 11 of the 21 heavy truck companies listed on the A-share market published their 2021 annual reports. After combing through all the annual report data, you can find that 10 out of the 11 companies have made profits. It is worth noting that the net profits of 7 of them achieved year-on-year growth. Some industry insiders believe that the heavy truck industry may return to a relatively normal level in the second quarter, the annual sales will show a rising trend, and there are still good opportunities in the industry.

Last year's sales were mixed

According to data disclosed by relevant media, China's heavy truck market showed an overall downward trend in 2021. The final result of the heavy truck market is 1,395,300 units, a decrease of about 223,600 units compared with the same period of the previous year, and so far, sales have continued to decline for eight consecutive years.

However, in certain months, sales of heavy trucks rebounded. According to data provided by CAAM, in December 2021, China's truck market sold a total of 310,600 units, increased by 7% from the previous month, of which the heavy truck market (note: including chassis and tractors) sold 57,500 units, with a month-on-month increase of 13%.

Some media have combed through the sales data of heavy trucks in 2021, and the data shows that since August 2021, the heavy truck market has begun to show a weak trend, with overall sales of less than 60,000 units for five consecutive months. However, the sales of 57,500 units in December is a big increase from the previous month, and the year-on-year decline is significantly lower than in the previous four months, and this can be regarded as a good recovery trend.

The tracking and monitoring results by other institutions indicate that in 2021, the heavy truck market showed two curves with large differences between the two halves of the year. In the first half of 2021, the average monthly sales of the heavy trucks were 174,000 units, an average increase of 58%; but in the second half of 2021, the style of the heavy truck market suddenly changed, and the average monthly sales from July to December were only 58,000 units, an record average decrease of 56%, and finally the year ended with a cumulative decrease of 14%.

Media analysis believes that there are many reasons for the sales decline in the heavy truck market: first of all, the current situation of the logistics and transportation market is that there are more vehicles and fewer goods, so the motivation for truck owners to buy new trucks is obviously insufficient. Second, after the full implementation of the China VI emission standard for diesel vehicles, the market demand was overdrawn in advance. Another reason is that a large number of heavy trucks are hoarded by dealers, and the industry's inventory has been high, resulting in an unfavorable situation in new truck sales.

There is also a positive side to the market this year

Data show that in March 2022, the market sold 77,000 heavy trucks, and for the first quarter of 2022, the number is 231,800; although the sales are still declining, but the market has shown a positive side, and the performance of new energy heavy trucks made many people's eyes light up.

Following the "rapid progress" in 2021, the domestic new energy heavy truck market has once again shown a skyrocketing trend this year. According to recently released terminal sales data of compulsory insurance, in January 2022, 2,283 new energy heavy trucks were sold in China, with a year-on-year increase of 1,318%, and a penetration rate of 7.5% into the heavy truck market.

According to many industry insiders, it is not surprising that the new energy heavy truck market started with such an optimistic surge. This is because the orders got by commercial truck makers for new energy heavy trucks in 2021 reached 25,000 units, of which about 15,000 were still not delivered, and some of the orders have been postponed to January this year, and the gradual release of this demand will continue to push up the sales of new energy heavy trucks.

From the current trend, we can see that this year's new energy heavy truck market will open a high-speed growth channel, and annual sales are expected to achieve three times growth. Thanks to a series of favorable factors, such as environmental policies and infrastructure stimulation, the new energy heavy truck market will keep getting better, again proving that new energy heavy trucks are getting more and more popular, and the dream of selling over 30,000 units in the year is expected to become a reality.

Overall, the competition in the heavy truck market in 2022 will undoubtedly be more intense, not only forcing truck makers to compete for market share for smaller market demands, but also requiring them to sell the newly-produced China V trucks that were not sold last year, which further increases their sales pressure and gives them a harder test.

Limited impacts on some upstream and downstream companies

Under such a market circumstance, how do major upstream and downstream companies deal with it? It is reported that some companies have already adjusted their strategies to cope with the severe industry environment.

In an interaction with investors on April 6, Tianrun Industry said that the company sold 957,000 heavy-duty engine crankshafts in 2021. The crankshafts made by the company are mainly supplied to OEMs that produce engines, and assembled with OEM engines into heavy-duty trucks and other fields. When talking of the future development of the company, Tianrun Industry was relatively optimistic. In response to investors' concerns, the company said that the heavy truck industry is expected to need about 1.2 million crankshafts in 2022 and overall in a rising trend, mainly to digest the inventory from the mass production of China V trucks in 2020 and the first half of 2021, and is expected to resume normal production and sales in the second half of this year.

It is noteworthy that in 2021, Tianrun Industry built four crankshaft production lines and one connecting rod line, and after the lines are put into operation, the company's production capacity will be further increased and able to meet the market demand of 1.3 million units. In the view of Tianrun Industry, this is to prepare for the surge of heavy truck market in the future, and even if the sales of heavy trucks rebound in 2022, the company can still respond effectively.

Although the heavy truck market performs not so well, it seems that Weichai Power's related business haven't been greatly affected. In response to investors' questions, Weichai Power said that in 2021, the company's market share of heavy truck engines increased steadily by 2.8 percentage points year-on-year to 31%, and their important strategic customers included Shaanxi Heavy Truck, FAW Jiefang and China National Heavy Duty Truck. Tan Xuguang, chairman of Weichai Power, stated in the media that in the first quarter of 2022, although the performance of heavy truck makers fell sharply on a year-on-year basis, the market has obviously begun to recover compared with Q4 last year, and industry demands are expected to increase gradually.

At the recent performance briefing, the relevant person in charge of Weichai Power said that currently, the company, around their major business, power system, has achieved diversified business structure adjustments, rapidly developing their strategic business and export business, and also improving their intelligent logistics business. These words revealed the company's confidence in the future market. In addition, the sources of growth for Weichai Power's business are not limited to the field of power chains, its high-end hydraulic equipment has grown rapidly year on year, and its CVT and new energy businesses are also being commercialized.

All in all, although the sales of heavy trucks will somewhat decline, there are still many growth opportunities for the entire industrial chain, and in addition to arranging products array in advance, major companies need to invest more in after-sales service.

Source: www.lanfucaijing.com