King of the road

After hot sales in 2007, China's light bus industry has entered a fallow period this year, yet Xiamen Kinglong United Automotive Industry Corporation says it's entering the market now.

Kinglong recently announced that a light bus production base with an annual production capacity of 60,000 units has been put into production and sales orders are being accepted. Total investment is up to 280 million yuan.

According to industry analysts, after the 2007 boom, sales of domestic light buses began to decrease this year. Meanwhile, the implementation of the China III emission standards and soaring raw material costs enhanced the sales slump.

Based on the statistics with China Association of Automobile Manufacturers, in 230,707 light buses were sold in 2007, up 22.73 percent year-on-year. Yet, the number was 154,216 units in the first eight months of this year, up only 5.9 percent when compared to the same period of 2007.

Why did Kinglong select this period to enter the light bus industry?

"In order to broaden the production lines and obtain sustainable development," is the answer from Dai Yongjia, the company's spokesman.

As one of the biggest bus and coach manufacturers in China, Kinglong's grabbed the largest market share in the country after the company's 100,000th vehicle rolled off the production line in 2006. So far, Kinglong's various buses and coaches range from 6-18 min length and are divided into five broad production ranges, including tourism, passenger transport, public transport, group transport and special purpose vehicles.

"With light buses added, Kinglong can boast of being the bus company with the most integrated production line in China, with the vehicles range from 4-18 m in length," Dai says.

According to close sources with Kinglong, the company began to set up the light bus base as early as in 2006. Last September, the company's first light bus rolled off the production line. Since Kinglong's light bus project hadn't received final approval from authorities at the time, the company didn't advertise its new model and remained low profile until recently.

Besides broadening the production line, industry experts say the strong market demand and the high profits in the light bus industry are another factor that lured Kinglong into this market.

In recent years, due to the country's fuel oil tax and the bans lifted on low-emission vehicles, light buses had huge opportunities in the logistic transportation sectors in cities and rural areas.

Founded in 1988, Kinglong has two holding companies, Kinglong United Automotive Industry (Suzhou) Co and Nanjing Kinglong Coach Manufacturer Co. The subsidy in Suzhou has been focused on producing soft buses since it was established in 1992 and gradually broadened its production line.

Thanks to the light buses, the Suzhou-based company has topped the sales performance in the domestic market and the business is even better overseas where 80 percent of the company's exported vehicles are light buses.

Currently, there are hundreds of light bus manufacturers in China, but only eight with an annual production capacity reaching more than 10,000 units, so competition is fierce among the main producers, such as Shenyang Brilliance Jinbei Automotive, Shenyang Polarsun Automobile Co, SAIC-GM-Wuling (SGMW) Automobile Co, Nanjing Iveco Motor Company and Jiangling Motors Co.

Kinglong says its technical know-how and advanced light bus series distinguishes it from the competitors.

"Our light buses adopt an integrated production flow, die pressing, integrated body technology and cathode electro coating process. So far, the state of the art technology maintains a leading role in this industry," says Liu Zhijun, the company's deputy sales manger.

Along with its classic Kinglong Hiase model, the company's light bus has four different types of overall body features covering basic, standard, classical and luxury types. The bus can be customized as required and it offers various space solutions, including flat, medium and high ceilings, with different heights and optional extended body lengths. All the buses can meet Euro III emission standards, according to Liu.

So far, Kinglong hasn't released the price range of the new model, but industry analysts predict that it could be equivalent to the hot selling models offered by Shenyang Brilliance Jinbei Automotive and Shenyang Polarsun Automobile.

Some industry experts also predict that the sales performance of the light buses will improve in the fourth quarter.

"Based on the sales and service platform for medium and large-sized Kinglong buses, we are actively developing the sales channels for light buses, so as to consolidate the base for the coming all-round competition," says Huang Zhiqiang, Kinglong's deputy manger with client service department.

(China Daily 10/20/2008 page7)