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The policy effect shows signs of warming in the diesel engine market from January to February

In recent months, the market has shown signs of warming up, with internal combustion engine companies closely tied to the national economy beginning to see a noticeable rebound. In January, FAW Xichai's monthly production more than doubled, rising from over 5,000 units to more than 10,000 units, reflecting a growth rate exceeding 200%. Weichai also reported strong performance, with engine orders surpassing 30,000 units in February and reaching 40,000 units in March—marking a historical high. Meanwhile, Yuchai secured nearly 60,000 engine orders in February, and it is anticipated that March’s order volume will return to levels seen in the same period in 2008. China National Heavy Duty Truck Group also reported a significant increase in production and sales for March, setting new records. The data suggests that the market is heating up, though not uniformly across all sectors. While some segments are showing robust growth, others remain under pressure. According to the latest issue of the “China’s Auto Industry Production and Sales Newsletter,” the trucking industry—which is highly sensitive to investment-driven economic policies—experienced a 53.91% year-on-year increase in February sales. However, the cumulative sales from January to February only rose by 12.37%, with heavy trucks seeing a decline of 17.73%. Analysis of diesel engine market data reveals that major players like Middle East Wind, Weichai, and Dongfeng Chaochai faced negative growth in February, while smaller manufacturers supporting light trucks and agricultural vehicles, such as Shandong Laidong, Anhui Quanchai, Jiangxi Jiangling, and Kunming Yunnei, saw significant gains. This discrepancy can be attributed to differences between orders and actual sales, as well as varying company reporting practices. Industry experts suggest that the recovery in the heavy-duty vehicle market is largely driven by increased demand for construction vehicles, such as dump trucks, due to national infrastructure projects. Liu Wei from Weichai Power explained that production levels in late 2008 were extremely low, and by March this year, inventory had been largely consumed, prompting manufacturers to replenish stock. The “Car to the Countryside” policy, which began in March, has also contributed to the market’s improvement, particularly in the light truck segment. Dongfeng Commercial Vehicle Company noted that its light truck sales have outperformed those of heavy trucks, with a notable surge since March. Additionally, models with engines under 4100cc have gained popularity, targeting low-end agricultural and light commercial vehicles. According to the China National Automobile Association, government policies aimed at boosting domestic demand and stimulating the economy have had a tangible impact, especially on micro and light vehicles. Some analysts believe that the early start of the market may also be linked to the upcoming implementation of stricter emissions standards for light diesel vehicles on July 1, 2023. Despite the positive trends, concerns remain about the sustainability of the current momentum. A leader from the National Association of Commercial Vehicle Fittings Market warned that the market’s growth might not last long, citing challenges such as local protectionism and the gap between production and consumption. Large companies with nationwide distribution networks are expected to benefit more in the future. Liu Chai from Weichai emphasized that the continuation of market growth depends on the sustainability of infrastructure projects and further government stimulus measures. He also pointed out that the logistics and transportation sector has not yet shown signs of a significant recovery. Dongfeng Commercial Vehicle’s market representative believes that the 4 trillion yuan national investment will gradually take effect, leading to visible improvements after May and June. Overall, while the market is showing signs of recovery, the path forward remains uncertain, with both opportunities and challenges ahead.

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