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According to the provisions of the State Environmental Protection Administration and the General Administration of Quality Supervision, Inspection and Quarantine, starting from January 1, 2008, heavy-duty commercial vehicles will fully implement the National III emission standards. By then, the nationwide sales of heavy trucks must meet the national III emission standards, the national II emission standards. The new heavy truck will no longer be able to sell. This will be another major challenge for China's heavy-duty truck industry after experiencing a sharp decline in 2005, and the market structure of the domestic heavy-duty truck industry may also change accordingly.
Missing core technology
A few years ago, the domestic mainstream engine companies and heavy-duty vehicle manufacturers have begun to take precautions to fully implement the national III emission standards. The key to emissions standards from State II to State III is the engine. In terms of engine technology, the implementation of State III means changing from a mechanical engine to an electronic engine.
In November of this year, Sinotruk and Weichai Power respectively listed in Hong Kong and issued additional A shares. Its main purpose is not only to increase production capacity, but also to meet technology upgrades and other related inputs for the National III emission standards.
Weichai Power is the heavy truck engine manufacturer with the largest domestic market share. Its series of engines developed in line with the National III emission standards have been assembled on the heavy trucks of Shaanxi Heavy Duty Truck and other companies. As of October this year, one of the offline WD12s was released. The engine has accumulated production and sales of more than 10,000 units.
According to CNHTC, its self-developed engine that meets China III emission standards has also been put on the market in July 2006. Since the listing of the first national III standard heavy truck in Beijing in 2004, the company’s national III standard heavy trucks have sold more than 7,000 vehicles.
Although domestic mainstream engine companies such as Weichai Power, FAW Xichai, Dongfeng Cummins, Shangchai Hino, Guangxi Yuchai, and CNHTC Hangzhou Engine Co., Ltd. have all developed engines that meet the National III emission standards, the electronic control of the engine core The high pressure common rail technology comes from a few foreign companies such as Bosch, Denso and Delphi.
China National Heavy Duty Truck related personages introduction, a country installs the electronically controlled high pressure common rail system the country III standard engine than the national II engine's cost is higher 40,000-50,000 Yuan. Although some domestic enterprises are also developing high pressure common rail technology, there is a big gap between the technological level and the international advanced level and they do not have the industrialization capability.
CITIC Securities analyst Li Chunbo said that the engine core technology that meets the national III emission standards is subject to human beings, which will threaten the industrial leading power of local companies to some extent.
Slowing market growth
In addition to the lack of core technologies, the slowdown in the heavy truck market next year, which leads to a decline in corporate profits, will also affect the pace of technological upgrading in the entire industry.
On the one hand, the full implementation of State III emission standards next year has stimulated a significant increase in sales of heavy trucks under this year's National II emission standards. According to statistics from China Association of Automobile Manufacturers, from January to October this year, a total of 412,657 heavy trucks were sold domestically, a year-on-year increase of 65.4%. After the implementation of State III emission standards, the maintenance and use costs of heavy trucks will also increase, which will lead to a decline in sales of heavy trucks.
On the other hand, the Central Government has already determined that the tightening monetary policy will be implemented next year. The growth rate of fixed asset investment in related industries is expected to decline to varying degrees and will also affect the growth of heavy truck sales.
Li Chunbo predicts that the entire commercial vehicle will increase by about 20% this year and is expected to fall back to 15% next year. Heavy trucks will increase by about 60% in the first three quarters of this year and will fall back to about 10% next year.
However, due to the inability of oil companies to provide fuels that meet the National III emission standards in 2008, some manufacturers have not yet prepared the technical and production preparations for the new national standard III cars. Some industry sources believe that strict implementation of the medium and heavy-duty vehicle country III emission standards on market sales from January 1 next year is still subject to variables, and full implementation of the emission standards may be around mid-2008. This will relieve the pressure of slowing sales growth to some extent.
"It is very likely that we will not be able to fully implement the National III emission standards on time in the next year. This is not only a problem of oil products, but also the issue of product preparation for the entire industry." China National Heavy Duty Truck Group said that China National Heavy Duty Truck will determine whether to continue production in accordance with market conditions next year National II emission standard heavy trucks.
Remodeling heavy trucks
The upgrade of the emission standards has also made it possible for China's CNHTC and Weichai Power to form a new competitive landscape.
In the calculation of sales volume of combined trucks and heavy trucks, China National Heavy Duty Truck ranks third in the industry, lower than FAW Jiefang and Dongfeng Commercial Vehicles, but it is the largest domestic manufacturer of heavy trucks with a capacity of over 14 tons, with a market share of 20%. In 2006, China Heavy Duty Truck produced and sold 60,000 heavy trucks; it reached 85,000 vehicles from January to October this year and is expected to exceed 100,000 vehicles throughout the year.
Weichai Power is currently the largest diesel engine manufacturer in China and has a market share of more than 80% of domestic heavy truck engines. Through cooperation with German Bosch Corporation, Weichai Power has greatly improved its technical level and is expected to be the biggest beneficiary of the upgrade of emission standards. . Weichai Power's holding of Shaanxi Zhongqi is one of the top five heavy-duty truck companies in China. Currently, it ranks third in the heavy-duty truck market with a capacity of over 14 tons and is the most capable of challenging the market position of Sinotruk.
As of now, the advantages of both parties are the complete vehicle and key components assembly. However, in November, the two financings of the two sides in the capital markets in Hong Kong and the Mainland respectively marked that they had started a new round of competition.
On November 8th, Weichai Power announced that it intends to issue no more than 60 million shares, raising no more than 5.58 billion yuan. In addition to building a 100,000-unit Lanqing engine production line, it will also increase the capital of Shaanxi Zhongqi for the construction of heavy-duty commercial vehicles. New product industrialization project. After the issuance of the issuance announcement, the reports of some securities institutions gave a rating of "strongly recommended".
On November 28, China National Heavy Duty Truck (Hong Kong) Co., Ltd. (3808.HK) listed in Hong Kong and raised more than 9 billion Hong Kong dollars. Most of the funds will be used to expand engine capacity and upgrade technology in Hangzhou and Jinan. According to CNHTC, the company's new engine plant in Hangzhou will have an annual production capacity of 150,000 units, Jinan's engine plant will have an annual production capacity of 100,000 units, and the merger can reach 250,000 units, in addition to supplying its own needs. Will supply other vehicle companies.
Industry sources said that it is not easy for China National Heavy Duty Trucks to completely break through the key parts and components such as engine and transmission, and form a complete industrial chain. As Weichai Power further expands vehicle R&D and production capacity and integrates its resources, it does not rule out the possibility of the latter surpassing the former. 
