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Fitch: Heavy Duty Truck Sales in China at Historical Peak
March 30, 2017 / 2:06 AM / 8 months ago

Fitch: Heavy Duty Truck Sales in China at Historical Peak

(The following statement was released by the rating agency) HONG KONG/SHANGHAI, March 29 (Fitch) The strong sales of heavy duty trucks (HDTs) in China in the first two months of the year are likely to extend to the rest of 2017 as infrastructure investment and property construction increase, Fitch Ratings says. Data from the China Association of Automobile Manufacturers (CAAM) showed that HDT sales in China surged 136% yoy in January and February to over 169,000 units. This exceeded the previous peak for the two-month period in 2011 when a CNY4 trillion government stimulus package was in place. The recent increase in sales was due to the combined effects of increasing construction and industrial activities, stricter implementation of anti-overloading regulations and emerging replacement demand, Fitch says. HDTs, which are widely used in mining, logistics and construction activities, are likely to continue to be in demand as economic growth remains healthy and sales in the property market recover. In addition, the strict enforcement of GB1589 Regulation, which limits the size, weight and loads for logistic trucks, has led to road transportation capacity bottlenecks and higher transportation fees. This has prompted operators to expand their HDT fleets to fulfil the strong transportation demand, and together with the ongoing replacement cycle, boosted HDT sales to a record high. Chinese diesel engine manufacturer Weichai Power Co., Ltd. (Weichai; BBB/Stable) and Chinese auto-manufacturer Dongfeng Motor Group Company Limited (DFG; A/Stable) have significant exposure to the HDT value chain and would benefit from the increased sales. Both Weichai and DFG have maintained leading market positions in their respective markets during the previous downturn and demonstrated business resilience. Both companies have recorded strong operational results as the market improved, which Fitch expects to flow through to strong financial results of their commercial vehicle segments. In 2016, Weichai's HDT engine sales and HDT truck sales rose 67.8% and 46.9%, respectively, while Dongfeng's HDT sales increased 21.8%. Contact: Roy Zhang Director +852 2263 9979 Fitch (Hong Kong) Limited 19/F Man Yee Building 68 Des Voeux Road Central, Hong Kong Jing Yang Associate Director +86 21 5097 3017 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available on www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT <a href="https://www.fitchratings.com">WWW.FITCHRATINGS.COM.. 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