China Securities Co., Ltd. released a research report stating that heavy trucks, defined as commercial vehicles with a gross weight exceeding 14 tons, are primarily used in logistics and construction. Since 2023, the heavy truck industry has entered an upcycle, with total sales steadily recovering driven by both domestic demand and exports. The report anticipates sustained industry growth, supported by replacement demand for National IV and V models domestically and expanding export opportunities beyond Russia. Even amid domestic subsidy uncertainties, industry sales are expected to remain robust in 2026, with exports providing sustainable growth for leading players. Key factors to monitor include domestic subsidy extensions, macroeconomic stimulus policies, and export momentum.
**Heavy Truck Industry: Dual Growth Drivers and Market Consolidation Benefits Leaders** Heavy truck sales fluctuate based on macroeconomic conditions, replacement demand, and policy incentives (e.g., subsidies/scrappage programs). Recent sales recovery stems from subsidies phasing out older National III/IV models, structural growth in LNG/new-energy vehicles, and stronger-than-expected exports. By 2026, natural replacement demand for National IV/V models is projected to sustain domestic sales at ~700,000 units, while non-Russian exports could push total sales to ~1.1 million. From 2027–2028, National V models will dominate scrappage, with over 4 million units in circulation supporting long-term domestic demand. Export potential remains significant, with addressable markets nearing 700,000 units.
**Market Structure & Profitability** The industry is highly concentrated, with the top five players (CR5) maintaining over 80% market share from engines to finished vehicles. Rising industry sentiment and high-margin exports favor leading companies.
**New Energy Growth to Moderate; Traditional Fuels Stabilized by Exports** In 2026, China’s new-energy heavy truck sector may see slower growth as purchase tax exemptions phase out, shifting to market-driven demand. Penetration is estimated at 30–35%, while LNG trucks dominate long-haul transport, resilient to short-haul electrification. Exports, predominantly diesel-powered, are expected to offset domestic diesel sales declines.
**Investment Outlook: Steady Domestic Demand and Export Growth** Domestic replacement cycles and export expansion should sustain industry sales. Extended subsidies could further boost sentiment. Focus areas include policy continuity, macro stimulus, and export durability.
**Risks:** 1. **Macroeconomic/Industry Cyclicality:** Demand ties to GDP, infrastructure, and environmental policies. Downturns may impact sales and profitability. 2. **Supply Chain Disruptions:** Raw material shortages or price volatility could strain production and margins. 3. **R&D Risks:** Failure to develop competitive products may hinder growth. 4. **New-Energy Profitability:** Intensified price competition or battery cost surges may delay breakeven. 5. **Export Barriers:** Trade tariffs or market access restrictions could slow overseas expansion.
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