Commercial Vehicle Market in 2024: Continuously Stabilizing and Improving, Four Major Segments Expected to Stand Out.

Commercial Vehicle Market in 2024: Continuously Stabilizing and Improving, Four Major Segments Expected to Stand Out.

Selected from China Automotive News

In 2023, with the help of favorable factors such as macroeconomic stability and recovery of consumer market demand, restorative growth became the main theme of the commercial vehicle industry. That year, various segments showed obvious signs of recovery, natural gas heavy-duty truck sales hit a new high again, overseas exports were frequent good news, and the new energy commercial vehicle market continued to heat up. Looking ahead to 2024, what is the outlook for China's domestic commercial vehicle market? Can growth trends centered on gas vehicles and export markets continue? What new directions will the industry develop?"

The market continues to improve, with total sales expected to reach 4.2 million vehicles.

From January to November 2023, China's commercial vehicle cumulative sales reached 3.6659 million units, and the total annual sales are estimated at around 4 million units. Industry insiders generally have a positive outlook on the commercial vehicle market trend in 2024. As macroeconomic conditions and consumer confidence continue to recover, coupled with the increasing support of industry supply and demand fundamentals and structural replacement-driven demand growth, China's commercial vehicle market is expected to continue its upward trend and overall sales are expected to be better than in 2023.

According to forecast data released by the China Association of Automobile Manufacturers (CAAM), cumulative sales of commercial vehicles in China will reach approximately 4.2 million units in 2024, an increase of about five percent year-on-year. At the recently held Forecast Summit for China's Automotive Market Development in 2024, Chen Chuan, Director of CAAM Data Passenger Car Strategy Research Institute stated that driven by factors such as continued recovery in related industries' GDP growth rates, enhanced policy effects, stable expectations for gas prices and new product stimulation from enterprises driving upgraded demand; it is anticipated that domestic commercial vehicle markets will further extend their recovery momentum into 2024 with updated demands being the main driver behind increased sales volume which is predicted to grow by 13% year-on-year.

Regarding the development prospects of the commercial vehicle market in 2024, mainstream commercial vehicle companies also hold optimistic views. Foton Motor believes that due to sustained consumer demand and the issuance of trillions of yuan in national bonds, the commercial vehicle market will receive strong support in the first half of 2024. The growth of new energy commercial vehicles and natural gas heavy trucks will bring structural growth to the industry. It is expected that China's domestic commercial vehicle market will remain stable with a total sales volume reaching 4.3 million to 4.4 million units, achieving a year-on-year growth rate of 8% to 10%. Specifically for medium and heavy-duty trucks, Shaanxi Automobile predicts a slight increase in China's domestic heavy truck market in 2024 considering favorable government policies, accelerated infrastructure investment, continuous improvement in new energy vehicles, intelligent connected cars, and natural gas heavy trucks among other segments.

JAC Heavy-Duty Trucks expects a moderate recovery for the medium and heavy-duty truck market in 2024 with a projected year-on-year growth rate of 10%. This prediction is based on three main factors: firstly, increased consumer support for economic development which benefits niche markets such as express delivery and green channels; secondly, approaching end-of-policy cycle leading to faster elimination of National III and National IV diesel vehicles; thirdly, sustained high price differential between oil and gas where LNG models continue their structural substitution.

Weichai also believes that the heavy-duty truck market will experience a slight growth in 2024, with annual sales reaching 1.05 million units. The market may exhibit a trend of peaking and then declining.

At the FAW Jiefang Business Conference in 2024, Li Sheng, General Manager and Deputy Party Secretary of FAW Jiefang, stated that China's economy will continue to maintain a growth rate of around 5%. The 'Belt and Road' initiative will inject strong vitality into China's economic development, including consumption, new energy, and new infrastructure as major driving forces for economic growth. Based on comprehensive analysis, it is projected that domestic demand for medium and heavy-duty trucks in 2024 will reach 1.15 million units, representing an increase of 11% compared to the previous year.

At the same time, Li Sheng made predictions about the domestic light-duty truck market in 2024. He mentioned that driven by factors such as overall economic recovery and consumer resurgence, it is expected that total sales of light-duty trucks in 2024 will reach 1.95 million units.

Considering the rebound in market demand by 2023, as well as the increasing demands for commercial flow, customer flow, and logistics, many industry insiders believe that the young truck market will continue its growth trend in 2024. The total sales volume for the year is expected to reach 1.9 million to 2 million vehicles, with a year-on-year growth of 5% to 10%.

The outlook for the bus industry in 2024 is also optimistic among professionals. "In particular, the large and medium-sized bus market is expected to maintain steady growth, with an estimated annual sales volume of 100,000 to 110,000 vehicles and a year-on-year growth of 10% to 20%. The continuous warming up of the tourism market will increase demand for various types of tourist buses including traditional long-distance power buses and smart buses," further analyzed by commercial vehicle industry expert Ren Shi. After "digesting" and "adjusting" in 2023, it is anticipated that policy impact on the bus market will significantly weaken in 2024 (cancellation of new energy vehicle purchase subsidies). In addition, with the advancement of pilot projects promoting comprehensive electrification of public sector vehicles ahead of others, it will play an important supportive role in stabilizing and recovering the new energy bus market.

Gas-powered vehicles and export markets are expected to continue growing.

In 2023, both the sales volume and year-on-year growth rate of natural gas heavy trucks lead in various sub-sectors. According to the current industry trend for demand of natural gas heavy trucks, China's market for these vehicles is expected to remain strong and experience a period of increased volume in 2024.

In light of this, Haitong Securities points out that due to the lower operating costs advantage possessed by natural gas heavy trucks, the market penetration rate for this vehicle type will increase annually. By 2024, it is anticipated that sales volume of natural gas heavy trucks could reach 290,000 units with a market penetration rate of 27%. A research report released by China Merchants Securities also mentions an estimated sales volume of around 280,000 units and a market penetration rate reaching approximately 27% by 2024.

Major mainstream heavy truck companies are also optimistic about the natural gas heavy truck market expectations for 2024. Shaanxi Automobile Heavy Truck believes that due to continued low freight rates and stable expectations for oil and gas price differentials, natural gas heavy trucks are expected to continue to achieve structural substitution for diesel models. China National Heavy Duty Truck Group predicts that the annual sales of natural gas heavy trucks in 2024 may reach 230,000 to 250,000 units, with a market share of around 30%. Among them, long-haul standard load transportation, coal transportation, sand and gravel transportation, express delivery and dangerous goods transportation will be the key application scenarios for natural gas heavy trucks.

In addition, from the new products exhibited at various truck company annual conferences, it is not difficult to see that high horsepower and long endurance have become important labels for natural gas heavy trucks. Among them, Shaanxi Automobile's flagship model DeLong X6000 Ultimate Edition with 700 horsepower (approximately 522 kW) in natural gas version has set a new industry record for high-power gas-powered trucks; FAW Jiefang Power released the 6SX116 liter CNG engine covering a range of 530-666 horsepower (approximately 395-497 kW); at the same time, considering factors such as driving range, convenient refueling capability and loading efficiency，many heavy truck companies have further increased their natural gas storage capacity by increasing cylinder volume or adopting designs with dual or even triple cylinders，thereby increasing vehicle endurance mileage. Moreover，companies including FAW Jiefang，China National Heavy Duty Truck Group，and Shaanxi Automobile Heavy Truck have all launched CNG+LNG dual-fuel models in order to balance long endurance and economy better，helping users reduce costs and increase efficiency.

Apart from competing in the field of tractor-trailers, many commercial vehicle companies are also expanding their presence in the medium and light-duty truck market with natural gas vehicles. This includes the launch of natural gas cargo trucks such as Jiefang JH6 and J6L, as well as mainstream light-duty truck brands like Foton Motor and Jianghuai Automobile increasing the proportion of natural gas models in their new vehicle announcements by the Ministry of Industry and Information Technology. All these developments indicate that natural gas vehicle models are extending beyond a single category to cover an entire product range, which will contribute to further increasing the market share of natural gas vehicles. It can be foreseen that with continuous technological advancements, there will be significant improvements in power performance, driving range, and product variety for natural gas vehicle models. Additionally, competition within this niche segment of natural gas commercial vehicles is expected to become more intense.

Robust export demand is also a major driving force behind the growth in commercial vehicle sales by 2023. According to industry insiders, there is still great potential for commercial vehicles in overseas markets by 2024. Foton Motor predicts that due to improved international competitiveness of domestic brands and sustained release of overseas demand, exports of commercial vehicles will reach around 800 thousand units in 2024, representing a year-on-year growth rate of 14%. Among them, heavy-duty truck exports are estimated to be between 280 thousand to 300 thousand units with a year-on-year growth rate ranging from 12% to15%. FAW Jiefang also stated that overseas demand for commercial vehicles will continue its upward trend; therefore, they will actively expand their presence in foreign markets through comprehensive product coverage, exploring incremental markets, and establishing cooperative channels.

Industry experts have pointed out that overseas exports are a major growth market for China's commercial vehicle industry and an important battleground for commercial vehicle enterprises. Currently, Chinese commercial vehicles have strong international competitiveness, especially domestically produced heavy-duty trucks which have significantly improved in quality. They have also gained a certain first-mover advantage in areas such as new energy and intelligent connectivity, enabling them to form strong competitive alternatives to overseas heavy-duty trucks with ample room for market growth. In the field of passenger vehicles, due to China's technological, cost, and supply chain advantages in large and medium-sized buses, overseas exports of these vehicles are expected to maintain a growing trend by 2024. Among them, regions such as Europe, America, Latin America, and Southeast Asia driven by stricter environmental policies are likely to see a substantial increase in demand for new energy buses. This provides an excellent opportunity for China's new energy bus manufacturers to expand their presence internationally.

At the same time, leveraging the "east wind" of commercial vehicle exports will accelerate the pace at which upstream and downstream companies within China's commercial vehicle industry venture abroad. By 2024, it is anticipated that the Chinese commercial vehicle industry will achieve both increased export volume and successful establishment of an international ecosystem – further enhancing China's competitiveness on the global stage.