The heavy truck industry has entered the traditional off-season of sales, with overall continuous destocking. In May and June, industry inventory decreased by 0.0037 million and increased by 0.0007 million, respectively. Terminal destocking during the "Golden September and Silver October" sales peak season will free up funds and inventory space, with the potential to release maximum elasticity.
As learned from the WiseNews APP, Guolian Securities has released a research report stating that according to data released by the first commercial vehicle network, heavy truck industry sales in July 2024 were approximately 0.059 million, down 4% year-on-year, and down 17% month-on-month. Cumulative sales of heavy trucks were approximately 0.563 million from January to July, a year-on-year increase of 2%, indicating continuous overall sales growth. According to insurance data, sales in the first half of the year were 0.301 million, down 5.6% year-on-year, mainly due to the high sales base at the beginning of 2023. From January to June, heavy truck exports were 0.152 million vehicles (according to CAAM), an increase of 9.4% year-on-year. The continuing growth of markets in Central Asia and South America and other emerging markets effectively offsets the downturn in the Russian market. The heavy truck industry has entered the traditional off-season for sales, with overall continuous destocking. In May and June, industry inventory decreased by 0.0037 million and increased by 0.0007 million, respectively. Terminal destocking during the "Golden September and Silver October" sales peak season will free up funds and inventory space, with the potential to release maximum elasticity.
In addition, natural gas heavy truck sales from January to June 2024 were 0.105 million vehicles, a year-on-year increase of 141.6%, and a penetration rate of 34.9%, which increased by 21.2pct year-on-year. As of July 20th, the diesel-natural gas price difference was 3.24 yuan/kg, and the current price difference trend was in high-level shocks. Natural gas vehicles demonstrate their economic advantages in this range. Sales of natural gas vehicles are expected to maintain a strong sales trend in July. In terms of downstream demand, the year-on-year decrease in new construction area of real estate in June was -21.9%, and the month-on-month increase was 20.6%. The manufacturing PMI in China for June was 49.4%, a decrease of 0.1pct month-on-month, and the construction industry PMI was 51.2%, a decrease of 1.1pct month-on-month. The macroeconomic data is still in the bottom range.
Subsidy policies are more aggressive than expected, and the domestic demand for heavy trucks is expected to increase.
On July 31st, two ministries issued a "Notice on the Implementation of Scrapping and Updating of Old Operating Trucks", which clarified the subsidy standards for scrapping diesel trucks with national III and below emission standards. The details of the subsidy were quickly followed up, exceeding expectations. The upper limit of the subsidy for scrapping heavy trucks and purchasing new ones is 0.11 million yuan or 0.14 million yuan/vehicle, which is expected to accelerate the replacement of national III heavy trucks. Guolian Securities estimates that the total number of national III and below heavy truck retentions is around 0.3 million. After the subsidy policy for scrapping and updating is implemented, it is estimated that it will drive 30%-40% of scrapped and new car purchase demands, corresponding to a demand for heavy trucks of 0.09-0.12 million vehicles. Wholesale sales of heavy trucks in 2023 were 0.911 million vehicles. This will drive the demand, accounting for 10%-13% of 2023's wholesale sales volume.
In terms of market share, the sales and market shares of various vehicle manufacturers have fluctuated greatly, and the sales and shares of Sinotruk have grown against the trend.
From January to June 2024, the cumulative domestic sales of FAW Jiefang, Dongfeng Group, Sinotruk, Shaanxi Automobile Group, and Beiqi Foton Motor were approximately 7.0/6.3/0.058/0.032/0.029 million vehicles, down 2.9% year-on-year for FAW Jiefang, 19.8% for Dongfeng Group, up 11.3% for Sinotruk, down 2.6% for Shaanxi Automobile Group and down 12.5% for Beiqi Foton Motor. Their market shares are approximately 23.3%/20.9%/19.2%/10.7%/9.8%, respectively, an increase of +0.6/-3.7/+2.9/-3.7/+0.3pct compared to 2023. The domestic sales volume and market share of Sinotruk increased simultaneously.
Investment advice: Subsidies boost domestic demand, and leading companies are expected to exceed expectations in profits.
In 2023, sales in the heavy truck industry bottomed out and began to recover, with domestic sales growth rebounding and overseas sales continuing to grow. From the perspective of absolute sales volume, domestic sales are still lower than the central level. Stimulated by the old-for-new policy, it is expected to promote the rapid release of terminal replacement demand in the next five months, driving domestic sales closer to the central level. In terms of exports, the growth of emerging markets such as Central Asia and South America is expected to effectively offset the increase in Russia's decline, and overall sales growth will remain stable. Due to the increase in exports and the proportion of natural gas, the profit structure has been greatly optimized, and profit elasticity is expected to be higher than sales elasticity. We recommend Weichai Power (000338.SZ) and Sinotruk (000951.SZ).
Risk warning: The policy effect is less than expected; and the export sales volume is less than expected.
