The bottleneck of China's commercial vehicle development


As China's commercial vehicle makers rushed into the world market with enthusiasm, a series of harsh restrictions became their stopping point.

According to industry sources, one of the important reasons is that the movement of China's commercial vehicle market is directly related to the government's macroeconomic policies and specific regulations such as taxation, fees, overloading, and emissions.

These policies and regulations may directly affect the sales volume of commercial vehicles.

Kevin Crumbo and Jeff Hallos, senior collaborators from the Rich American Consulting Co., Ltd., expressed their opinions on the similarities and differences in the policy environment between China and the United States.

In their view, the biggest obstacle is that China is not able to meet the stringent emission standards in Europe, Japan, and North America. Compared with these countries, the environmental protection regulations in the Chinese domestic market are far behind for several years. This means that China's export vehicles must install expensive equipment to achieve higher standards than the domestic market. This undoubtedly weakens the manufacturer's production scale advantage.

When China reached Euro III emission standards in July 2007, Europe was already the Euro IV emission standard. When China reached the Euro IV emission standard in July 2010, Europe at that time was probably already implementing the Euro V emission standard, and it was actively overexposed to the Euro VI standard.

One issue that is closely related to emissions is that China's fuel quality is relatively poor, with sulfur levels above 500 ppm, while US diesel has reached 50 ppm and Europe is even lower. Since sulfur molecules can damage the fuel particle filter used to remove smoke, the fuel particle filter for the Chinese market must be made larger while using more sophisticated metals.

“We did not see any action by the Chinese to bring its fuel to the purification standard in 2010,” said Lois Boyd, deputy general manager of Tenneco's commercial vehicle division. Truck manufacturers need to choose an engine strategy and become familiar with the fuel quality and emission regulations that they want to enter in different export markets. If they want to export to Europe or the United States, then the engine is the key.

Although China is lagging behind the United States and Europe in clean emissions, she is still ahead of other exporting countries, which will be an advantage in exports.

At the same time, at the forefront of R&D, Western auto companies have been developing alternative fuels for more than a decade, such as hybrid fuel and fuel cell technology, and this trend has just begun in China. At the 2007 Shanghai Auto Show, hybrid fuel and fuel cell technology models were mainly exhibited in sample form and were not put into operation.

As the further improvement of exhaust equipment is very expensive, strict emission standards and requirements for the fuel economy have forced Western companies to find alternatives. For example, BMW, General Motors, and DaimlerChrysler are sharing resources on hybrid fuel vehicles; GM and Toyota are also collaborating on fuel cell technology research. Chinese companies have also conducted cooperation projects with universities and government research institutions, but there is no similar cooperation between companies. However, with the strong support of the government, companies also intend to cooperate in this direction.

Xu Liankuan, president of Zonda Group, stated that “Chinese automakers should unite and cooperate with each other to achieve resource sharing in products and R&D to improve their overall international competitiveness.”

Due to economic prosperity and active investment, money is not a problem for many Chinese companies. And for many western technology companies that are familiar with engines like Cummins, AV List, and VM Motori, or deep emission management like Tenneco or Eberspacher, China means an increasingly prosperous market that is impossible in their home markets. Realized.

“We have updated the engine through cooperation with big manufacturers and are now accumulating good assets overseas.” Mr. Huo of Beiqi Futian said, with a typical attitude towards this issue.

In China, despite the economic prosperity, there are still many restrictions on other aspects of development.

Huo said: "The state attaches great importance to independent brands and intellectual property rights, but so far it has not formulated any detailed regulations. At the same time, the government is keen to develop passenger cars, but often overlook commercial vehicles.

"The most effective and direct way to encourage commercial vehicle manufacturers to carry out technological innovation is to adopt reasonable taxation policies, such as export tax rebates, mortgage taxes for product development and production equipment, and R&D expenditures and commodity consumption taxes."

Huo also complained about China's cumbersome bureaucratic procedures for vehicle approval.

He said: "Now China's automakers have to pass the exact same qualifications that are regulated by different agencies of the government departments. It's like you go to a hospital for a blood test and you need to get three needles to get different test results. The process of obtaining a qualification certificate from a government department usually takes three months. China’s complex qualification approval system is costly and inefficient.”

Du Weidong of Qingling Automobile Group pointed out that some decisions to reduce fuel consumption will hurt the interests of local SUV manufacturers that use larger engines.

He said: “The new tax structure will increase the tax for a 2.4-litre SUV engine from 5% to 12%, and it will have a negative impact on this area. More importantly, these regulations do not Separates diesel from gasoline, and diesel engines have a higher burning rate."

The ultimate local limit to economic development is the result of the success of the entire country and the automotive industry.

Tong Dongcheng, deputy general manager of Dongfeng Motor Co., Ltd., said: "The profit margin has returned to a normal level and the over-profit stage has ended. In the future, only innovative companies can survive, and we must respect the market principle."

Roman Mathyssek, a senior truck analyst at Global Vision, said that pressure on prices will increase. The purchasing power of consumers is increasing, which will put pressure on profits.

Eric Lee spoke on behalf of Jack Zheng, deputy general manager and director of purchasing department of Fiat Group China Market. He said that Chinese suppliers must increase the value chain by adding more engineering resources.

He said: “Residing at the supply base is a big challenge for local suppliers. They need good engineering integration. Some local suppliers are developing engineering. Due to the booming Chinese auto industry, local suppliers are also prosperous. It’s up and money has been invested. Seven or eight of them have become international suppliers.”

However, Li added: "Now, half of Fiat's suppliers are local suppliers, but they only account for 30% of the total parts purchases."

The Iveco subsidiary of Fiat Passenger Vehicles and Commercial Vehicles has established a joint venture with Nanjing Automobile Group respectively. Fiat component companies Teksid and Magnetti also have operations in China.



Shantui Construction Machinery Co., Ltd., founded in 1980, was a national category I key enterprise integrating research & development, production and sales of main engine products and key components of earth moving machinery, pavement construction & compaction machinery, building machinery, hoisting machinery and other construction machinery series products; and it is also a state-owned joint-stock listed company. It is one of the top 50 manufacturers of construction machinery in the world, and one of China`s top 500 manufacturers. On January 1, 1997, [Shantui" listed on the Shenzhen Stock Exchange (stock code: 000680). In June 2009, Shandong Heavy Industry Group was established, and Shantui became one of its Subsidiaries. As the backbone of construction machinery industry in China, Shantui always ranks as No.1 in the industry.

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