Due to changes in market structure, the advantages and influence of multinational companies and their partners in the heavy truck industry in China are increasing.
FAW Jiefang and Dongfeng commercial vehicles are facing awkward conditions. Over the past few years, due to aging products and technological backwardness, the market share of these two old state-owned enterprises has fallen sharply, and FAW has fallen to more than half of the original.
In contrast, thanks to cooperation with multinational corporations, CNHTC and Shaanxi Automobile have become dark horses in the heavy truck market. The market share of the two companies in the first half of this year has increased by 40% and 70% respectively compared to the same period of last year.
The industry believes that the market changes in 2006 are in favor of the development of multinational companies. Due to changes in the market structure, the advantages and influence of multinational companies and their partners in China's heavy truck industry are increasing.
Leading foreign partner companies
Judging from the market performance in 2006, the winners in the fierce competition are joint ventures or partnerships with foreign companies.
When it comes to sales performance, Shaanxi Automobile Group envied most domestic heavy truck companies. From 2005 until now, contrary to the continuing downturn in China's heavy truck market, this once relatively weak enterprise has maintained rapid growth. The growth rate in the first half of 2006 reached 73.2%, and it successfully occupied about 10% of the domestic market share. It was almost quadrupled when it was just four years ago when it was separated from the former Heavy Industry Group.
Interestingly, the increase in Shaanxi Automobile's sales performance coincided with the timing of its cooperation with foreign investors.
In 2004, Shaanxi Auto and German Man Company signed a cooperation agreement for the full introduction of MAN high-end products and heavy-duty vehicle technology, including cab, chassis, drive axle and mold manufacturing technology; in 2005, Shaanxi Automobile Group and Cummins of the United States Cooperation was established and Xi'an Cummins Engine Co., Ltd., which was jointly established with a 50:50 ratio, was established. After this, Shaanxi Automobile ushered in its golden period of development.
The person concerned analyzed that it was the successful cooperation with multinational companies that had the rapid development of this enterprise.
Shaanxi Steam has also admitted that in the process of cooperation with foreign large-scale automobile group companies, companies not only learned technology and management, but also learned from foreign brands' marketing experience and brand management skills.
China National Heavy Duty Truck Group is another highlight of China's heavy truck industry in recent years. Due to the rapid growth of sales, many people began to see it as a strong challenger to the liberation of Dongfang and Dongfeng. This company also benefited from frequent cooperation with multinational companies.
In addition to its deep roots in the Steyr platform, Sinotruk has also developed a joint venture with Volvo to develop the engine and then launched the Hao Hao series heavy trucks.
However, whether it is for Shaanxi Automobile or China National Heavy Duty Truck, this success is not without cost.
It is understood that for many consumers, the choice of the products of these two companies is more directed against their foreign investment background. A consumer in Beijing stated that one of the important reasons for purchasing heavy-duty products is that it contains Volvo's technology.
Large tonnage becomes a weak market
Unlike the lucky ones of China National Heavy Duty Truck Group and Shanxi Automobile, the majority of domestic heavy-duty truck companies' days in 2006 are not too good.
According to analysis, this is the result of the continuous development of the domestic logistics industry. High-tonnage, high-horsepower, high-tech heavy-duty truck products have increasingly increased demand in the market. According to foreign institutions, by 2010, heavy trucks with more than 15 tons will reach 70% of the Chinese market.
Heavy tonnage heavy trucks are precisely the advantages of multinational companies, but they are weak links for domestic heavy truck companies.
For FAW liberation, this is particularly evident. This company, which had ranked first in market share for six consecutive years, is now facing a rapid decline in sales. In the first half of 2006, its year-on-year drop was said to have reached nearly 30%.
"Orders from the parent company are not enough to maintain the survival of the company." A sales person at FAW Jiefang Dadai Branch complained to the "Financial Times" reporter. According to reports, because the number of orders from the liberation of FAW fell too much, in order to survive, the company had to seek orders from other companies.
For this dilemma, FAW liberated itself and felt helpless. According to an insider, the biggest problem of the company is not as good as people, other than the well-known reasons such as product aging. However, he insisted that if internationally renowned companies such as Volvo Trucks can cooperate with FAW Liberation, then companies will not be caught in the present situation.
Many domestic companies hold similar views. They believe that, like the car industry in the past, the current heavy truck industry is also the one who cooperates with foreign capital and who can win in the competition.
It is understood that another state-owned Dongfeng Commercial Vehicle has begun to accelerate the pace of cooperation. The Dongfeng Tianlong, a self-owned brand model launched earlier, is the result of its technical cooperation with Renault and Nissan Diesel.
Heavy truck structure will change
In 2006, the heavy truck market remained sluggish. However, the cooperation enthusiasm of multinational companies was not affected. The facts show that they have more frequent contact with domestic companies.
The joint venture between Chongqing Hongyan and SAIC and Iveco is in full swing. It is understood that Fiat’s commercial vehicle division, Iveco, has reached a joint venture agreement with SAIC Motor, and the joint venture will acquire 67% of Chongqing Hongyan Automobile Co., Ltd. and invest 120 million euros in Chongqing to build a new production plant in 2008. With the ability to produce 40,000 vehicles.
Through this cooperation, Chongqing Hongyan can change two major problems: the single product type and the shortage of funds. The existing mechanism will also be improved. The industry has given a very high expectation. It is generally believed that Hongyan will have a qualitative leap after this cooperation. Some people even boldly predicted that the original Wuzhou Wuling is the future of Hongyan.
Volvo Trucks immediately turned its attention to Shaanxi Steam after the cooperation with CNHTC was blown away, hoping to cooperate with this strong company.
According to the news from Shaanxi Automobile, the negotiations between Volvo Trucks and this company have basically come to an end. The cooperation plan for complete vehicles and parts and components is nearing completion. If there are no major accidents, the two companies are likely to formally form this year. Reached an agreement.
"If this cooperation can be achieved, we believe that Shaanxi Automobile may exceed Shengho in the next few years." An Shaanxi Automobile senior executive told the "Financial Times" reporter. He believes that the technology and popularity of Volvo Trucks will greatly change the fate of companies.
Since previous heavy trucks have made a lot of profits in the joint venture, many people are optimistic that Shaanqi is expected to sit on the top of the heavy truck industry in the next few years through this cooperation.