The demand for terminal in the heavy truck industry is still in a waiting period.

The heavy truck industry's terminal performance in August fell short of expectations, with exports slightly exceeding expectations: 1) Production: In August, heavy truck production was 61,000 units, down by 6.5% month-on-month and up by 20.0% year-on-year; 2) Wholesale: Wholesale sales of heavy trucks in August were 62,000 units, down by 12.2% month-on-month and up by 7.1% year-on-year; 3) Sales: Terminal sales of heavy trucks in August were 40,000 units, down by 23.2% month-on-month and 13.4% year-on-year, weaker than expected due to seasonal factors; 4) Exports: The heavy truck industry exported 24,000 units in August, up by 3.2% month-on-month and 9.7% year-on-year, slightly exceeding expectations due to rush shipment effects; 5) Inventory: The inventory of heavy truck companies decreased by 11,000 units, and channel inventory decreased by 14,000 units in August. Industry Structure: Natural gas heavy trucks enter a period of observation, while new energy continues to shine. In August, sales of new energy heavy trucks were 6,272 units, up by 116.3% month-on-month and down by 4.6% year-on-year. The penetration rate of new energy was 15.6%, up by 10.1% and 1.4% respectively. In August, sales of natural gas heavy trucks were 12,000 units, down by 35.3% month-on-month and 31.3% year-on-year. The penetration rate of natural gas heavy trucks was 30.5%, down by 5.7% and 8.0% respectively. The average oil and gas price difference in August was 1.9 yuan, down by 0.6 yuan compared to July. Vehicle Structure: Foton's terminal market share rose month-on-month, and Jiefang Dongfeng's exports continued to strengthen. In terms of terminal sales, in August 2024, the domestic market share of Jiefang/Dongfeng/SINOTRUK/SHAANXI/FAW was 21.5%, 21.6%, 17.9%, 10.1%, and 11.5% respectively. Compared to the full year of 2023, the change was -1.6%, -1.8%, +0.9%, -0.3%, and +0.6% respectively. Compared to July, the change was -1.2%, 0.1%, -0.8%, -0.1%, and +0.8% respectively. In terms of exports, in August 2024, the domestic market share of Jiefang/Dongfeng/SINOTRUK/SHAANXI/FAW was 18.5%, 16.3%, 36.7%, 21.5%, and 2.2% respectively. Compared to the full year 2023, the change was +2.3%, +10.3%, -7.0%, +1.0%, and -5.1% respectively. Compared to July, the change was +1.0%, +5.6%, -2.7%, -2.2%, and -0.6% respectively. Engine Structure: Weichai's terminal market share decreased month-on-month. Overall, in August, Weichai/Cummins/XiChai/Yuchai/SINOTRUK had market shares of 25.4%, 21.0%, 14.0%, 12.2%, and 7.8% respectively. Compared to the full year of 2023, the change was -6.1%, +0.6%, +0.6%, -1.2%, and -0.1% respectively. Compared to July, the change was -4.3%, +0.5%, +0.6%, -0.3%, and +1.7% respectively. In terms of engine matching, Weichai's matching rates with SHAANXI/SINOTRUK/Jiefang were 66.8%, 54.6%, and 29.0% respectively in August. Compared to July, the change was +3.4%, -11.0%, and -6.9% respectively. Compared to the full year 2023, the change was -12.8%, +2.7%, and -11.1% respectively. In terms of fuel type, the market shares of Weichai diesel and natural gas engines in August were 17.2% and 53.1% respectively. Compared to the full year 2023, the change was -5.0% and -11.5% respectively. Compared to July, the change was -0.8% and -2.0% respectively. Investment Suggestions: Await the effects of the replacement of old vehicles policy to manifest. Natural gas heavy trucks, exports, and the replacement of old vehicles policy will collectively support a steady increase in sales in 2024. Demand will follow the weak economic recovery, with growth in road freight providing support to the existing fleet. The high oil and gas price difference will drive the continued high growth of natural gas heavy trucks; policy and economic factors will accelerate the volume growth of new energy heavy trucks. High growth in exports outside of Russia will offset the decline in Russia, making the overall export resilient throughout the year. Subsidies for phasing out Euro III and below operating diesel trucks exceeded expectations, driving up terminal demand through the replacement of old vehicles. Await the effects of the replacement of old vehicles policy to manifest. It is expected that sales will rebound in Q4 under the policy stimulus. We maintain our forecast of 955,000 wholesale sales for the whole year, a year-on-year increase of 5%. Investment in the heavy truck sector should focus on high alpha companies (exports + natural gas heavy trucks) with high certainty of performance realization [such as Sinotruk Jinan Truck, Weichai Power, FAW Jiefang Group, and Beiqi Foton Motor]. Risk Warning: The recovery of the domestic heavy truck industry may fall short of expectations, and natural gas price increases may exceed expectations. This article is sourced from a research report published by the Soochow Automotive Analyst Team, authored by analyst Huang Xili. GMTEight Editor: Wen Wen.