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October 09, 2018 | Forbes
In what is turning out to be a very difficult year for China’s motor vehicle industry, one bright spot is the country’s truck industry. After registering a stunning 52% increase in sales to an all-time high of 1.1 million units in 2017, sales of heavy-duty trucks increased another 15% in the first six months of 2018. While sales of heavy-duty trucks slowed in July and August, China’s truck makers will once again produce and sell more than one million heavy-duty trucks this year, making China the largest truck market in the world by a wide margin.
Of the 29 million vehicles produced and sold by China’s automakers in 2017, approximately 25 million were passenger cars and four million were trucks and buses. Trucks made up almost 90% of commercial vehicles last year, and within the truck category, 1.1 million heavy-duty trucks and 229,113 medium-duty trucks were sold in the country.
The reason that China’s truck industry, including its diesel engine sector, is dominated by local, Chinese companies is quite simple. The freight industry in China, like many in the country, is fragmented, with thousands of relatively small companies competing for freight traffic. In this extremely competitive environment, there is a limit to what a trucker can charge for each ton of freight that is transported between, say, Shanghai and Beijing. That freight price then defines how much a trucker can pay to purchase, operate, and maintain a truck, after taking into account the cost of fuel and the wages of the driver.