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In the first two months of this year, the domestic passenger car market showed signs of recovery, driven by various government policies aimed at boosting economic growth. However, the commercial vehicle sector remains in a weak position, underperforming compared to the overall industry and facing significant declines. Sales and production figures have been on a downward trend, making operations increasingly challenging for businesses in this segment.
According to data from the China Automotive Industry Association, commercial vehicles sold 348,700 units in January and 345,700 in February, representing a year-on-year decline of 13.15% and 6.94%, respectively. In contrast, passenger cars saw a drop of 18.57% in production and 14.84% in sales. Only trucks experienced positive growth, with production up by 8.79% and sales rising by 12.37%. Despite some improvement in February, the overall commercial vehicle market remained sluggish, especially for large, medium, and light buses, as well as heavy trucks, which saw sharp declines.
The main reason behind this downturn is the lack of strong policy support for commercial vehicles compared to passenger cars. While tax reductions on small engines (1.6 liters or less) have benefited passenger cars significantly, commercial vehicles received minimal benefits. Only minibuses and light trucks saw some improvement due to favorable policies, but other models struggled. The "Cars Go to the Countryside" initiative helped boost sales of light trucks and minibuses, but these segments are not as profitable as larger commercial vehicles, which continue to lack government backing.
At the end of last year, the government announced a 4 trillion yuan stimulus package to boost domestic demand. While this provided some confidence to the commercial vehicle market, the sector received only a small portion of the investment, limiting its growth potential. Much of the stimulus was expected to flow into consumer spending, which would benefit the passenger car market more directly.
As a result, many research institutions are pessimistic about the outlook for the commercial vehicle market this year. Xinhua estimates that total passenger car sales in 2009 could fall between 5% and 15%, while demand for medium and heavy trucks is expected to drop by around 10% from 2008 levels. Although new stimulus measures have had a positive impact on minibuses and light trucks, the commercial vehicle market is closely tied to GDP growth, and its negative trend is unlikely to reverse soon, possibly remaining around -10%.
Looking back at the first two months of the year, the effectiveness of government support policies on the passenger car market is evident, confirming the success of the government’s efforts to stabilize the industry. Premier Wen Jiabao's emphasis on domestic demand, people's livelihood, and economic growth during the recent sessions highlights the importance of continued policy support. Many companies are now urging the government to introduce urgent policies to support the commercial vehicle sector and help it overcome current challenges.
It is expected that the government will soon implement existing policies and introduce new ones that are favorable to commercial vehicles, particularly for heavy trucks, which play a key role in production. Expanding the demand for commercial vehicles across society is crucial for long-term growth. Ultimately, only through balanced development can the entire automotive industry recover and thrive.
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