This Frost & Sullivan research service titled Strategic Analysis of Commercial Vehicles in China provides an analysis of the market size, competitive environment, regulatory impact, technology, and growth opportunities. In this research, Frost & Sullivan's expert analysts thoroughly examine the markets for the following: heavy-duty trucks, medium-duty trucks, and light-duty trucks.
Market Overview
Demand from Industrial and Agricultural Sectors Trigger Growth in the Market for Commercial Vehicles in China
The commercial vehicle (CV) market in China is poised for expansion, egged on by the rapid pace of industrialization that has uplifted prospects for this sector. In particular, the truck segment is slated for huge growth. The development of the CV market in China is closely tied to economic advancement. The agriculture and industry sectors have helped amplify the demand for road transportation and markedly augmented cargo turnover, accounting for about 60 percent of GDP. This is much higher than the world average of 30 percent and even higher than the developing nation’s average of 49 percent. It is unlikely that the proportion will fall below 50 percent until 2020. "The emulation of western logistics practices and the creation of massive road infrastructure to facilitate local and global trade will further catalyze freight movement using trucks," notes the analyst of this research service. "As one of the ‘Ten Industries Restructuring and Revitalization Plans’, the development of the logistics industry is bound to act as an important driver for the truck market."
Although the outlook is promising, the CV market is not without its share of challenges. The economic predicament has resulted in a decline in investment and in the need for road transportation, restraining demand levels in the CV market. For instance, within the logistics industry, more than 40 percent of enterprises experienced a contraction with several medium-sized and small logistic enterprises quitting the fray. To circumvent the impact of the global financial meltdown and deal with the grim domestic economic situation, the State Council intends to provide $1.46 billion for the procurement and replacement of CVs. This initiative is bound to stimulate purchasing intentions. The Chinese Government has earmarked $732.1 million for auto replacement to raise auto consumption. Moreover, the Government has allocated another $732.1 million for lump sum subsidies to farmers who replace their three-wheeler vehicles or low-speed trucks with mini trucks and light-duty trucks or purchase these vehicles directly. To succeed in this marketplace, it is imperative for participants to fully exploit the opportunities provided by the policies and incentives unleashed by the Government.
The Chinese CV market has become more dispersive in the past few years and the trend is expected to continue with the entry of new original equipment manufacturers (OEMs). Competition is set to intensify in this price-sensitive market. Aggressive pricing strategies, coupled with financing/leasing options can help increase both unit shipment and trigger lucrative revenue streams. In addition, participants should devote attention to optimization of product portfolios. "There is ample scope for development and introduction of new and innovative products in the heavy duty trucks (HDT) and light duty trucks (LDT) segments," says the analyst. "For now, trucks and systems built upon end-user focused product planning are recommended to set the stage for sustainable development." R&D investment must be ramped up to roll out value-oriented products that deliver ROI and payback to customers, and elevate the quality of truck transportation. Fuel efficiency and emission control are vital elements in the marketing mix that can help stoke demand. Savvy participants must keep this in mind to move marketing strategies into top gear.
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