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the East?
Truck manufacturers need to watch their backs, as the Chinese up the stakes and set their sights on Europe
Words: Oliver Dixon
The launch of Sitrak, a joint brand between MAN and Sinotruk, has pushed the development of Chinese truck manufacturing back into the spotlight.
The background to this latest move is well known. MAN owns a 25% plus one share stake in Sinotruk, which it bought for €560m (£505m) in 2009. The German OEM has some history with Sinotruk’s parent, China National Heavy Duty Truck Corporation (CNHTC), which it partnered in 1983 in a relationship that saw the Chinese manufacturer build Steyr trucks for the Chinese market. More recently, CNHTC partnered Volvo in a joint venture known as Jinan Huawo Truck Co; an ill-tempered and unsuccessful partnership that ended when MAN bought its Sinotruk stake.
MAN is not the only western OEM to have pursued a role in the Chinese market. Iveco operates two Chinese joint ventures – Naveco and SAIC-Iveco-Hongyan – while Mercedes-Benz signed up with Beiqi Foton last June.
Volvo, still bearing the bruises of its foray into China, appears to be content to leave the running to DND, while US OEM Navistar signed an agreement with Anhui Jianghuai Automobile Co (JAC) in September 2010.
Also rumoured to be looking at a possible market entry into China are KamAZ and Tata Motors.
Most of the discussions surrounding the Chinese industry have tended to focus on foreign OEMs exploiting what is clearly the world’s largest truck market. But, increasingly, this is beginning to look like a mistaken and rather naive attitude, with China instead eyeing the European market.
New opportunities
It is clear that China offers opportunities. During the global downturn in 2009, worldwide truck production dropped 29%, but rose 22% in China. Today, the Chinese market accounts for 49% of total CV production in Brazil, Russia, India, and China, which in turn accounts for 66% of global production. By 2014, the global CV industry is expected to increase by 1.8 million units, with China expected to account for 36% of total global growth. By any reckoning, these are signiicant numbers.
However, unlike their passenger car brethren, who can lay claim to roughly two-thirds of the Chinese car market, foreign-owned truck manufacturers account for less than 3% of the Chinese truck market. Despite many a brave word, not much money has yet been made in China, although an awful lot of money has been spent there.
This expenditure has been about establishing a market presence. While the incoming, foreign-owned OEMs have been spending hard to establish joint ventures in the Chinese market, the Chinese OEMs – many of which are now senior partners in those joint ventures – have been spending hard on research and development.
According to an Alix Partners research report published in autumn 2010, the increased volumes that characterised the Chinese truck market during the global downturn proved hugely beneicial.
“The increasing volume for Chinese OEMs has provided enhanced proit and allows for a larger commitment to R&D, which will allow these domestic OEMs to compete on a global level.” ■