Enterprise style: Shaanxi Heavy Duty Truck “take advantage” of the Big Three to reshuffle the heavy truck market

Recalling the restructuring and adjustment of heavy-duty truck companies in 2005, the biggest expectation due to the transformation of capital bonds is the future trend of Shaanxi Heavy Industry.

Due to the acquisition of the Hunan Torch by Weichai Power, indirectly causing changes in the investment of Shaanxi Heavy Duty Truck, Shaanxi Heavy Gas did not suffer from distress, but instead gained the support of the Big Three market:

First, Weichai Power - China's first internal combustion engine company listed on the Hong Kong main board; the world's largest single-brand 10 litre engine manufacturing base; the country's largest high-speed high-power diesel engine manufacturer; respectively occupy heavy vehicles and construction machinery, etc. 80% and 78% of the market share of the power supporting industry; having the "China's first power" brand image.

Second, the Hunan Torch, one of the largest manufacturers of heavy-duty vehicles and core components in China, is ranked first in the national gear industry in terms of various operating indicators of its Shaanxi Fast Gear Factory; and in the heavy-duty automotive market of more than 15 tons in China. With a market share of more than 90%, it has become the world's first single-plant annual production. In addition, it also includes China's largest heavy axle - Shaanxi Hande Axle Factory.

Cummins, one of the world's top 500 companies, is a global leader in the manufacture of power equipment. Its products are widely used in international well-known heavy-duty truck brands; as the demand for high-performance, environment-friendly heavy-duty trucks grows rapidly in the Chinese market, it is a joint venture with Shaanxi Auto. The successful establishment will greatly enhance the competitiveness of both sides in the Chinese heavy truck market.

The acquisition of the Hunan Torch, all businesses intended to "Shaanxi Heavy Duty"

In the incident of Weichai’s acquisition of the Hunan Torch, there was a role that could not be ignored. This was SSA. Shaanxi Heavy Duty Truck has many auras such as “15-ton heavy truck boss”, “a 95% monopoly share of domestic heavy-duty military off-road vehicles” and “the most profitable heavy truck company in China”. Therefore, it includes SAIC, FAW, and Dongfeng. As many as 26 companies, including China National Heavy Duty Truck, Yutong, and Wanxiang, have participated in the competition for Hunan Torch equity. The reason is obvious: Having controlled the Torch, it has the most excellent strategic resources for China's heavy trucks.
Big Three together, Shaanxi Heavy Industry has a complete industrial supply chain

In Weichai's large customers, approximately 97% of Shaanxi Heavy's products use Weichai products. In 2004, Weichai Power developed a dedicated engine for the DeLong F2000 model produced by Shaanxi Heavy Gas, and the two parties jointly conducted large-scale marketing. In July this year, Tan Xuguang, chairman of Weichai Power, visited Shaanxi Heavy Gas and presented Weichai with the newly developed “Lan Qing” Euro III engine. All indications indicate that Weichai attaches great importance to Shaanxi Heavy Gas. The indirect holding of Shaanxi Heavy Gas also means that it has secured the existing market share of Weichai in the engine sector.

At the same time, Cummins, currently the largest international diesel engine company in China, has also set up Xi'an Cummins Engine Co., Ltd. with Shaanxi Automobile Group. The new company will produce Cummins 11-liter fully electronically controlled engines, mainly equipped with heavy-duty trucks, long-distance luxury buses and double-deck buses and other heavy vehicles with a total weight between 26 and 44 tons. The target production in 2010 will be 50,000 units.

After Weichai Power successfully acquired the Hunan Torch, Shaanxi Heavy Gas has the strongest domestic supply chain for heavy-duty truck parts. The integration of three domestic heavy truck powertrain manufacturers, Weichai Power, Fast Gear, and Hande Axle, provided a strong guarantee for Shaanxi Heavy Industries and Power, which has become a major winner in this acquisition.

Heavy truck market fissile soon, Shaanxi Heavy Duty "shrinks" reshuffle

The data shows that between 1991 and 2003, the annual average growth rate of domestic heavy truck production was 24.4%; in 2004 and the first quarter of 2005, sales volume of the heavy truck industry in China increased by 46% and 6% year-on-year. However, since the second quarter of this year, sales in the heavy truck industry in China have experienced a sharp decline, and nationwide heavy truck sales (including non-integrated vehicles and semi-trailer tractors) have fallen by 14% year-on-year, compared with a 70% year-on-year decline in the third quarter.

In spite of this, the authoritative industry analysts believe that the domestic heavy-duty vehicle market will maintain a growth rate of 10% to 15% in the next few years. It is estimated that by 2008 China's heavy-duty truck production will reach 450,000 to 500,000 vehicles. In the first half of 2005, although the entire heavy-duty truck market was sluggish, Shaanxi Zhongqi still achieved impressive performance. As one of the fastest-growing and most growth-prone enterprises in China's auto industry, Shaanxi Heavy Gas will inevitably set off a new round of reshuffle in the pattern of China's heavy-duty truck market after experiencing this acquisition.
View related topics: China National Heavy Duty Truck Breaks Monthly Sales Record for National Heavy Truck Industry

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