Commercial Vehicle Market to Meet Recovery

www.chinatrucks.com. As time comes to Nov., domestic commercial vehicle manufacturers have released the bulletins of the third quarter. Due to the downtrend of macro economy and weak market needs, performance of commercial market in the third quarter was barely satisfactory. Though a rebound is seen for the overall market recently, manufacturers are faced with various circumstances.

As statistics released by China Association of Automobile Manufacturers (CAAM) shows, the production of commercial vehicles reached 308.100 in Sep., a 12.89% growth over Oct. and a 5.78% drop over last Sep. Sales in Sep. reached 301.800, a 9.21% growth over Oct. and a 7.59% drop over last Sep., among which sales of heavy truck suffered severe decline. Bulletins from listed companies have proved this impact on their performances.

Sinotruk released its bulletin on Oct. 28, which revealed that the company lost 16.9 million Yuan in the third quarter with operation revenue reaching 4,377 million Yuan, a 6.52% drop on a year-on-year basis. Compared with the performances in the first three quarters, the drop has been narrowed. Sinotruk reached the net profit of 22.3 million Yuan in the first three quarters, a 94.15% drop on a year-on-year basis and the operation revenue reached 14.9 billion Yuan, a year-on-year drop at 27.99%. Influenced by state macro control, the growth in the heavy truck market has slowed. It is estimated that the yearly profit will reach 181 million Yuan, while the profit in 2011 was 362 million Yuan.

Revenue of JAC fell by 13.0% to 21.1 billion Yuan in the first three quarters, the net profit dropped by 29.5% to 404 million Yuan. The net profit reached 88.6 million Yuan in the third quarter, a 95.1% growth on a year-on-year basis and falling by 58.2% over the previous quarter. Earnings per share in the third quarter reached 0.07 Yuan, growing by 95.1% on a year-on-year basis and falling by 58.2% on a sequential basis. The reason for the huge growth in the third quarter was due to the narrowing decline in the market. Sales of MPV and light truck grew respectively. Meanwhile, thanks to the price drop in raw materials, the gross profit was immensely improved.

Performances of heavy truck of Foton fluctuated due to the profit decline after the joint venture move of Auman and the sluggish heavy truck market. CAMC reached the operation revenue of 102.3 million Yuan in the third quarter, falling by 18.18% on a year-on-year growth.

The performances of listed truck companies fell mainly because of the investment decline in infrastructure. An analyst said that the main reason for the weak market was caused by the rise in employment, salary and the needs for promotion.

Some favorable factors also showed up during the decline. Take Foton as example, analysts believed that the sales rise of middle and heavy truck has contributed to the structural improvement for the company. Sales of Foton fell by 4.2% and 14.1% on the year-on-year and sequential basis respectively, among which, sales of middle and heavy truck reached a year-on-year growth of 5.4% and dropped by 1.6% on compared with last quarter. With the growth in market share for middle and heavy truck, the structural transformation of products has contributed to the growth of gross margin in the third quarter.

As analysts pointed out, the macro economy has reached the bottom and is like to be seen with a recovery with the ongoing structural transformation in economy. Thanks to the growth in PMI in domestic manufacturing and a series of railway construction projects, the sluggish market will meet a recovery.

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