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The recently concluded Central Economic Work Conference has brought a sense of optimism to the Chinese people, as it emphasized the government's commitment to increasing financial support for improving people's livelihood and promoting social harmony. However, commercial vehicle manufacturers are facing a more challenging outlook. The conference highlighted the need to prevent economic growth from becoming overheated, avoid a sharp rise in prices leading to inflation, and shift monetary policy from expansionary to tighter. These measures could signal a downturn for the commercial vehicle sector.
FAW Trade Corporation’s marketing department predicts that the total truck market may decline by 5% to 10% next year. Wang Wenbing, deputy general manager of Yutong Bus, is also not optimistic about the bus industry’s growth in 2024. Deng Ping, general manager of Chongqing Hengtong Bus Co., Ltd., believes that with macroeconomic changes, the "survival of the fittest" will become more intense in the coming year.
Major players like China National Heavy Duty Truck, Dongfeng Liuzhou Automobile, and Shaanxi Zhongqi are closely analyzing the conference outcomes and preparing for potential shifts in the market. A similar situation occurred in 2004–2005 when excessive investment and credit expansion led to a severe downturn in the heavy truck market. After macro-control measures were introduced, the sector saw its first negative growth in eight years, with a drop of nearly 40%.
Industry experts note that the medium- and heavy-duty truck market has historically followed the national economy’s growth curve, aligning with China’s five-year economic plans. Since 1979, every major macro-control period—such as in 1985, 1989, 1999, and 2005—has had a tightening effect on the truck market. This time, the regulatory pressure is even stronger than before.
This marks the first time in a decade that China has adopted a tight monetary policy. The central bank has already raised interest rates five times in a single year, with a sixth hike expected soon. Additionally, the deposit reserve ratio was increased to 14.5%, the 10th such increase in recent years, reaching a 20-year high. This level of tightening is rare globally.
FAW Trading Corporation’s analysts believe that while infrastructure investment remains strong and large-scale projects continue to drive demand, new projects under the new macroeconomic policies may face significant reductions. This will impact future truck demand. Meanwhile, tighter consumer credit policies are also affecting the market. Around 40% to 50% of truck buyers now rely on loans, especially in regions like Tangshan, Shaanxi, and Inner Mongolia. With higher interest rates and stricter loan approvals, demand could be significantly curbed.
Although passenger cars are primarily for personal use and less affected by fixed investment declines, Deng Ping argues that tighter capital supply across the economy will still have an impact on the auto industry. He recalls how macro-controls in 1995 and 2005 severely affected the passenger car sector. Many small businesses disappeared after those rounds of regulation, and the same pattern could repeat, benefiting larger companies in the long run.
Industry insiders also point out that China’s large trade surplus may lead to further adjustments in export policies, such as potentially eliminating export tax rebates. While Chinese commercial vehicles have strong price competitiveness globally, these policy changes and the RMB’s appreciation could hinder their international expansion.
Moreover, Deng Ping warns that this round of macro-control could put pressure on bus companies expanding their operations. Companies investing in new production facilities or building factories may face financial strain under the new economic environment. Some ongoing projects might even be temporarily halted.