From the just-announced 2011 annual report, although the performance of Weichai has declined due to the declining heavy-duty industry, the figures in the financial report clearly show that Weichai's performance is not only better than that of most OEMs, but also shows that Heavy bargaining power in the engine field. And, this dominance will continue at least until after 2014.
The decline momentum is lower than the industry level Weichai Power, which also has a big incentive to list Hong Kong stocks and A-shares. In the financial report disclosed at the end of March, Weichai achieved revenue of 600.19 billion yuan in 2011, a year-on-year decrease of 5.15%. The net profit attributable to shareholders of listed companies was 5.597 billion yuan, a year-on-year decrease of 17.48%.
Table 1 shows that due to the overall decline in the commercial vehicle industry last year, the performance of various listed companies with trucks, especially medium- and heavy-duty trucks, has declined to varying degrees. Foton Motor’s 2011 net profit was RMB 1.152 billion, a year-on-year decrease of 29.99%. Sinotruk (HK)’s net profit was RMB 1.168 billion, a decrease of 32.5% year-on-year; China National Heavy Duty Truck Jinan Truck Group’s net profit was RMB 362 million, a year-on-year decrease of 46.13%; JAC The net profit of motor vehicles was 618 million yuan, a year-on-year decrease of 46.88%, and that of Hualing Xingmao was 505 million yuan, a year-on-year decrease of 29.05%.
As the saying goes, “We have finished eggs under cover.” As a manufacturer of powertrains for heavy trucks, Weichai also experienced a decline in performance. However, due to the strong bargaining power, Weichai has fallen below the level of the industry. Its 2011 net profit was 5.597 billion yuan, a year-on-year decrease of 17.48%, which was lower than Foton, Heavy Truck (Hong Kong), Heavy Truck Trucks, Jianghuai and Hualing. Its operating profit was 7.17 billion yuan, a year-on-year drop of 22.45%. It was also lower than Futian. JAC, Valin and Sinotruck truck shares.
At the same time, Weichai's profitability is still surprising. Its net profit is close to 10%, much higher than that of other automakers. The comprehensive gross profit rate of completed vehicles and key parts and components was 23.77%. Although it decreased by 2.79 percentage points year-on-year, it was still far ahead of the OEMs, indicating Wei Chai’s higher profitability. The reporter learned that if we exclude the factors of Weichai's Fast Transmission and Shaanxi Auto Heavy Duty Truck, the Weichai Engine's gross profit margin in 2011 alone exceeds 30%.
There is no doubt that the high profitability of Weichai comes from high market share and high bargaining power. In 2011, Weichai sold 31.84 million heavy-duty trucks and its market share was 36.16%. This figure was down by 4.5% from 40.7% in 2010 and 0.6% higher than in 2009. This means that the market share of the Weichai heavy truck engine has remained at over 35% in recent years.
The dispute over the driving power of heavy trucks Actually, the question of the driving power of heavy trucks has not stopped over the past few years.
On the one hand, the latter entrants such as Yuchai have continuously introduced new ones (from the earliest 9.8 liters of YC6M, to 10.3 liters of YC6MK and 12/13 liters of YC6K) to challenge Weichai’s heavy engine dominance; on the other hand, the major OEMs produce their products. The wind of the engine has intensified, with Hongyan’s joint venture with SAIC Fiat producing the “Coso 9” CURSOR9 engine, followed by Hualing’s own engine and the Foton-Daimler joint-venture OM457 engine, followed by a joint venture between JAC and Navistar. (To be approved). These joint ventures between domestic and foreign heavy truck plants in the field of complete vehicles and key components will shake the strong position of Weichai Heavy Machinery in the foreseeable future.
However, judging from the current situation, Weichai’s dominance in the heavy truck power sector will remain until 2014. First of all, Weichai's existing supporting OEMs, such as JAC, Futian, Hualing, Hongyan, etc., will not be able to replace the unit in a large scale within two to three years. When the JAC-Navistar joint venture project is approved is still unknown, even if approved this year, from the production line to the localization of the product, to fully mature, it will take at least two or three years; Hualing heavy truck engine project just obtained National Development and Reform Commission approves; Daimler-Benz 0M457 heavy-duty engine will not be introduced into China until at least stage IV; and whether domestic sales of the engine of the SAIC Motor Fiat Red Rock “Coso 9” can reach 10,000 (Taiwan) this year, but also depends on Hongyan Jieshi market performance of high-end heavy trucks.
Second, the high degree of dependence of FAW's liberation on Weichai engines is difficult to reverse in the short to medium term. At present, though there are two engine subsidiaries of Xichai and Dachao Deutz in the liberation of FAW, the half of the supporting power of the entire vehicle is provoked by Weichai. Its dependence is very high (this is totally different from the Dongfeng system).
Third, although the engine companies of China National Heavy Duty Power Co., Ltd., Dongfeng Cummins and other OEMs are relatively strong, they are still limited supply to the outside world and are subject to the overall development strategy and deployment of the parent company. This model determines that they are unlikely to challenge Weichai’s hegemony position in the next two to three years.
It can be seen from this that the development trend of Weichai Power will also greatly influence the pattern of China's heavy truck market in a few years.
Schedule I: 2011 annual report data of some truck listed companies



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