Automotive industry: Commercial vehicles may receive national policy support
On March 27th, the Yutong Bus Company website reported that Liu Tienan, deputy director of the National Development and Reform Commission, visited Yutong Bus accompanied by provincial and municipal leaders, including Deputy Governor Shi Jichun and Mayor Zhao Jiancai. During the visit, they discussed supportive policies aimed at revitalizing the company and the broader commercial vehicle sector. The full report is included in the text below.
Currently, the Chinese government has rolled out a plan to revitalize the automobile industry, with a focus on certain sub-sectors. While the policy includes incentives for light trucks under the "Car to the Countryside" initiative, commercial vehicles have been hit harder. In the first two months of 2009, China sold just 10,268 large and medium-sized buses, marking a 39.2% year-on-year decline. Heavy truck sales also dropped sharply, with 40,344 units sold—a decrease of 48.1% compared to the same period last year.
According to media reports, the China Automobile Industry Association is actively pushing for targeted support measures for the commercial vehicle sector. Based on recent news developments, it's likely that the government will introduce new policies in the second quarter to boost the industry.
If such policies are implemented—such as tax relief on consumption or purchase taxes—commercial vehicle manufacturers could see a significant boost. Sales in the first quarter were weak, but with the upcoming peak season, we expect a recovery in the second quarter. As a result, we have upgraded our rating for the commercial vehicle sub-sector to “overweight.†Among listed companies, Yutong Bus and Jinlong Bus, leaders in the medium and large bus market, along with Weichai Power and Sinotruk, key players in the heavy truck segment, are well-positioned to benefit.
Considering current valuations, we recommend Yutong Bus and Weichai Power as strong investment options in this recovering sector.