Truck maker aims for export growth

Shaanxi Automobile Holding Group plans to increase overseas sales to one-third of its total as well as boosting niche products

Shaanxi Automobile Holding Group Co Ltd, the only heavy truck producer in western China, has been expanding its overseas business on the back of its growing share in the domestic market.

As the country's Belt and Road Initiative brings increasing opportunities overseas, the company plans to strengthen its sales and service networks and implement a localization strategy to increase its market.

The company sold 8,000 automobiles, or around 10 percent of its total sales, in overseas markets in 2015.

"Our target is to raise the share of our overseas market sales to one-third of the company's overall sales by the end of 2020. Meanwhile, one-third of overseas sales should be locally produced by then," says Wang Yanhong, the company's general manager.

He says the quality of China-made heavy trucks has improved a lot in the past decade and many export models are welcomed by foreign clients in Southeast Asia and Africa.

"Many of our products have better performance than their peer group vehicles," he says.

The company has so far exported its trucks to more than 90 countries and regions. It has three subsidiaries, 37 offices, 24 4S (sales, spare parts, service and survey) stores, 70 initial dealers and 310 service facilities in overseas markets.

In some countries like Ethiopia, Iran, South Africa, Malaysia and Nigeria, the company has its own assembly units, which have greatly increased its localization level.

Tian Chao, general manager of Shaanxi Heavy Duty Automobile Import and Export Co Ltd, a subsidiary, says the performance in the past year was not satisfying in his view.

"Our exports were affected by the price drop in crude oil last year. Russia, the big energy giant that used to be our best foreign market, reduced its orders due to falling oil prices," he says.

The devaluation of the rouble has worsened the export scene. However, Tian says the crude price will not always stay low and the company has been actively exploring new foreign markets.

"Vietnam, the Philippines, Pakistan and Africa are all potential markets for us," he says. "The company will increase efforts in branding. It's very important. We entered the overseas markets 10 years ago, which was not as early as our European competitors. Thus, some foreign buyers still prefer to choose secondhand European products than Chinese ones. The major reason is that we don't have strong brand recognition."

He says the company will improve its after-sales service by increasing the number of service agents abroad.

Another focus area is electric vehicles. Boosted by the Chinese government's supportive policies for the new energy vehicle sector and measures to reduce carbon emissions, the electric vehicle industry has achieved rapid growth in the past two years.

According to the China Association of Automobile Manufacturers, China produced 70,552 electric vehicles in the first four months, up 165.3 percent year-on-year. It sold 66,444 during the same period, up 171.2 percent year-on-year.

The company started research and development into e-cars in 1999 when it designed and produced the first electric tractor, which was used at Shanghai's port.

Wang, general manager of the company, says it will invest 50 million to 100 million yuan ($7.5 million to $15 million; 6.7 million to 13.5 million euros) in R&D of electric automobiles this year and increase the investment accordingly in future.

The company produced and sold 900 e-vehicles in 2015. Wang expects the company will produce and sell 2,000 this year.

"The battery technology is the core for electronic automobiles. The gap between China and Europe is narrowing," Wang says.

After rapid growth in previous years, China's heavy truck manufacturing industry is riddled with overcapacity: production capacity is more than 2 million units a year while demand is less than one-fourth of that.

In 2015, China sold 540,000 heavy trucks. Wang expects sales will grow to around 600,000 units this year.

So, the company is looking at niche markets. It has decided to develop new models and offer better service, particularly for the booming logistics industry.

In the January-May period, the company's sales of heavy trucks to logistics companies rose by 50 percent year-on-year.

The company plans to produce and sell 100,000 automobiles this year, which would ensure 30 percent year-on-year growth.

dujuan@chinadaily.com.cn

(China Daily European Weekly 07/08/2016 page29)