What are the market opportunities for heavy truck companies to collectively "go overseas"? What are the development models?

fter the peak of truck sales in 2020, it will be difficult to achieve such a high sales performance for a long time. The domestic truck market has become a stock market.

According to data from the China Association of Automobile Manufacturers, China commercial vehicle market will see a 31.2% drop in domestic sales in 2022, but the overseas export market will increase by 44.9%. The domestic and foreign markets are in stark contrast.

When domestic competition intensifies, some people begin to look overseas opportunities. Starting from 2022, most mainstream heavy truck brands in China begin to pay more attention to overseas sales. In addition to selling trucks in the traditional sense, they seem to have started long-term plans.

Recently, we communicated with a person who has been engaged in overseas heavy truck sales for many years, and asked him to introduce the opportunities for heavy truck export this year and what to do from different overseas perspectives.

● What are the opportunities for exporting heavy trucks overseas?

At the FAW Jiefang Business Annual Conference in 2023, Hu Hanjie, Assistant General Manager of FAW Group and Secretary of the Party Committee of FAW Jiefang Company, pointed out when talking about overseas markets that Facing the current overseas market opportunities, Jiefang will accelerate the deployment of overseas markets and gradually expand overseas markets. Do well, and hope that overseas exports will reach more than 40,000 vehicles this year. In addition, Sinotruk, SAIC Hongyan, Shaanxi Automobile, etc. are also stepping up their emphasis on overseas markets.

Based on the information from various sources, the economic development of overseas markets has brought many market opportunities to Chinese heavy truck brands, which are mainly reflected in the following aspects:

1. Asia, Africa, Latin America and other regions have great potential for economic development

The market areas for the export of domestic heavy trucks are generally concentrated in some developing countries in the third world such as Africa, Southeast Asia, South America, and Mongolia. These areas either have mineral resources or have a relatively low level of urbanization. In terms of infrastructure construction/mineral mining, etc. There is a lot of room for development.

Regardless of whether it is mineral mining and transportation, or construction of water conservancy, roads, and railways, the demand for heavy trucks and construction machinery is relatively large, and the backwardness of the local automobile industry is basically negligible. It is a good opportunity for heavy truck companies.

2. Increase in the Russian market

In recent years, the escalation of the conflict between Russia and Ukraine has led to turmoil in the international situation in some regions, and international relations have become increasingly complex. At this time, some economies represented by Europe and the United States have launched economic and political sanctions against Russia, which directly led to the withdrawal of original European auto companies from Russia. As a result, part of the truck market also withdrew.

According to Russian customs statistics, in 2022, the number of trucks Russia imports from China will triple from 2021, to a total of 31,000. This data is a major evidence of changes in the Sino-Russian truck market transactions.

Judging from the current international situation, it is difficult to alleviate the contradictions in some regions in a short period of time. Therefore, this year's Russian heavy truck market is still a major field for Chinese brands to exert their strength.

3. Grab the market with established European truck companies

Before heavy trucks of Chinese brands went overseas on a large scale, heavy trucks of European, Japanese, Korean, and American brands were popular in Africa, Southeast Asia, and Latin America, and most of the corresponding market areas were developing countries with relatively backward economic levels , so mainly second-hand trucks.

In recent years, the world has been reducing carbon emissions. Especially for European truck companies, the products are constantly upgrading and switching. There have been many discussions on engine emission standards and banning the production of fuel vehicles. From the perspective of enterprise development path, many heavy truck enterprises in Europe are keen to develop high-end models such as new emission standards and AMT, which is in line with the development of the automobile industry and understandable.

However, from the perspective of many overseas regions that need to import trucks, neither the vehicle maintenance level nor the road transportation conditions are enough to meet the conditions for the use of these high-end models. Certain chance.

4. Competition between Chinese heavy truck brands

As we all know, the pace of domestic heavy-duty truck companies going global is not consistent. Except for a few companies that have been in overseas markets for a long time, most companies have only begun to pay attention to them in recent years.

Judging from the overall overseas market development of the Chinese brand heavy truck, Sinotruk went out relatively early and well-known achievements, which also laid the foundation for the export of other domestic heavy truck companies.

However, when the market share reaches a certain level, it will be difficult to make a breakthrough. Therefore, at this time, other domestic brands are pouring in, and some brands are targeting the original heavy truck market.

According to a person familiar with the matter. At the same time, he added that overall, for a long time, the first position of Sinotruk's export is still unshakable.

● What are the development models?

1. Sell the truck first

The first development mode is to sell the truck first and occupy more market share. This development mode is generally in the early stage of the export market. Enterprises rely on price advantages, brand promotion and other methods to quickly sell vehicles to occupy the market, but it should also be noted that if accessories and repairs cannot keep up with the expansion speed of the market, it will be unfavorable for the establishment of brand reputation, and the larger the market will be in the later period There are more problems encountered.

2. provide the service before enterthe market

The second development model is to provide services before enter the market, and use accessories to drive the new car market. This is the normal operating logic of the commercial vehicle market, but it requires a lot of capital and manpower investment in the early stage, and small brands may not be able to afford it.

It is understood that FAW Jiefang is currently adopting this model in its layout of overseas markets. In the case of a bad domestic market environment, Jiefang encourages domestic powerful dealers to go overseas, and first builds a distribution center overseas and uses a central warehouse for spare parts. To drive the overall sales of vehicles, this method will be more secure and will help pave the way for the follow-up market.

3. Go overseas with major national projects

The third development mode is to go out following the major national construction projects.

We know that with the development of the Belt and Road Initiative, my country has aided infrastructure projects in many countries. At this time, if we can seize the national strategic opportunity to leverage and follow the first phase of the project to go out, then the results will be very impressive. , but it has to be said that it is very difficult to have such an opportunity, and not every manufacturer can realize it.

4. Deepen localized operations

The fourth development model is to rely on local local enterprises for localized operations.

It is reported that in some countries in Africa, the local tariff and taxation policies for purely imported vehicles and locally assembled vehicles are different. For example, in Kenya, purely imported cars are subject to a 35% tariff, but imported parts are only subject to a 10% tax, and after the vehicle is assembled, the local government has a consumption tax concession plan, which has led to the failure of purely imported cars in some countries. , must rely on local assembly.

Therefore, if a strong partner can be found in the exporting country, it is also a good development model to establish an assembly plant locally. It can not only avoid tariffs reasonably, but also use local manpower, material resources and capital to carry out localized operation of the brand. Avoid the occurrence of "acclimatization".

In addition, it should be noted that in addition to the export of heavy trucks, the demand for trailers in some regions has also begun to appear. Some brands only want to reduce costs, and it is difficult to guarantee quality, which is not conducive to the maintenance of the market and is not conducive to Chinese trucks. Brand.

● Afterword

The heavy truck export market is booming throughout 2022, and high expectations are placed on the overseas market this year. This is a good opportunity for Chinese heavy truck brands to go global, but we also hope that all brands will also pay attention to methods and methods while competing for sales in overseas markets , while helping the local economic construction, the sales volume, evaluation, profit and other aspects of Chinese truck brands can be best improved.