Exports seen as potential solution to overcapacity issues in
Chinese plants.
Over the past decade, mainland China's medium- and
heavy-commercial-vehicle (MHCV) production has experienced
remarkable growth, soaring from 1.3 million units in 2013 to a peak
of 2.1 million units in 2020.
Despite this impressive expansion, production factories are not
operating at full capacity, and average plant utilization has
struggled to exceed 50%. As of the end of 2023, mainland China's
MHCV production volume was at 1.11 million units — just 24% of
total production capacity, which is estimated to have reached 4.7
million units, per S&P Global Mobility's
MHCV Production Capacity Module.
Government Guidelines and Industry Consolidation
To tackle the overcapacity issue, Chinese policymakers have
introduced a series of guidelines aimed at consolidating the
automotive industry. These measures include setting annual
production floors for individual automakers. Companies that fail to
meet these production targets will be blacklisted and prohibited
from declaring new models.
As a result, approximately 10 manufacturers, including BAW,
Lifan Sojen Auto, and Youngman, have exited the MHCV sector since
2013, leading to a reduction in the number of plants from 98 to 85.
In the meantime, production activities have become increasingly
concentrated among leading manufacturers, with the market share of
top-five players having risen from 66% in 2013 to 76% in 2023.
Shifting Focus to Global Expansion
The slow advancement in industry consolidation, coupled with
mounting challenges to domestic demand — including a moderating
economy, diminishing stimulus effects, oversupplied trucking, and
driver shortages — has pushed mainland Chinese MHCV
manufacturers to turn their focus towards global expansion.
Leveraging a matured supply chain, the Belt and Road
initiatives, and favorable geopolitical opportunities, these
manufacturers have successfully doubled their exports of above
5-ton trucks and buses from the 2021 level of 192,000 to 378,000
units in 2023, according to the General Administration of Customs
of the People's Republic of China.
The Road Ahead: Global Expansion and Growth Potential
Furthermore, leading players have established over 80 overseas
assembly plants (with around 50 included in our forecast
geography), boasting a combined capacity of more than 170,000 units
per year. This strategy not only saves costs but also alleviates
domestic capacity utilization, as kits used for assembly in
overseas plants are sourced from facilities in mainland China.
While exports now account for over 30% of production, there is
still a long way to go for mainland Chinese MHCV manufacturers to
leverage the global market as a means to digest the surplus in
production capacity. Factors such as underdeveloped sales channels,
inadequate aftermarket services, limited brand recognition,
insufficient advanced technology, and fierce competition from
global players remain hurdles.
Still, a low base and the ongoing increases in product quality
of Chinese MHCV products suggest substantial potential for future
growth. In the November release of S&P Global Mobility's
MHCV Model Production Forecast and Export Module, we anticipate
Chinese MHCV brands to produce 1.5 million units globally (combined
domestic and abroad) in 2027, with maximum capacity utilization
rate improving from 24% in 2023 to 30% that year.
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Learn more: MHCV Production Capacity Forecast
