Core Viewpoint - The heavy truck industry is entering an upward cycle starting in 2023, driven by both domestic sales and exports, with total sales expected to steadily recover due to ongoing replacement demand for National IV and V models and significant export growth in non-Russian regions [1][2]. Group 1: Industry Overview - Heavy trucks, defined as commercial vehicles with a total weight exceeding 14 tons, are primarily used in logistics and engineering applications. Their sales are closely linked to macroeconomic conditions, replacement demand, and subsidy policies [2]. - The industry has seen a rebound in sales over the past two years, primarily due to the scrapping and replacement subsidies that have encouraged the elimination of older models, as well as structural growth from gas and new energy vehicles [2]. - By 2026, the natural scrapping demand for National IV and V models is expected to support an annual domestic sales scale of around 700,000 units, with total sales projected to remain around 1.1 million units [2]. Group 2: Market Dynamics - The heavy truck market is characterized by a high concentration, with the top five companies maintaining a market share of over 80% for many years. This concentration is expected to benefit leading companies as the industry experiences rising profitability and high-margin export growth [2]. - The export market has significant potential, with an estimated market space of nearly 700,000 units, indicating further growth opportunities [2]. Group 3: Future Projections - The growth rate of new energy vehicle sales may slow down as the domestic purchase tax exemption is set to decline in 2026, transitioning the new energy heavy truck market to a market-driven phase [5]. - The penetration rate of new energy vehicles is projected to be between 30-35% by 2026, while traditional fuel vehicles are expected to remain stable due to their dominance in long-haul transportation [5]. - Continued domestic replacement demand and sustained export growth are anticipated to support a stable high level of industry total volume through 2026 [9].

Core Viewpoint - The heavy truck industry is at the beginning of an upward cycle, with the expanded subsidy policy for vehicle replacement in 2025 expected to accelerate domestic sales and return to average levels. Although export growth has temporarily slowed, there is significant overseas market potential. Current low valuations of truck stocks suggest that future profits may reach new highs alongside sales, indicating that the investment value of truck stocks has not been fully realized [1]. Sales Performance - In August, heavy truck wholesale, terminal, and export volumes increased by 46.7%, 66.0%, and 15.6% year-on-year, respectively. The wholesale sales volume reached 92,000 units, with a year-to-date total of 716,000 units, reflecting a 14.5% increase year-on-year [2]. - Terminal sales in August totaled 67,000 units, with a year-to-date total of 486,000 units, marking a 25.3% year-on-year increase. The significant growth in terminal sales is attributed to the effective vehicle replacement policy [2]. - Heavy truck exports in August amounted to 39,000 units, with a year-to-date total of 246,000 units, showing a 7.1% year-on-year increase. Exports to regions outside Russia saw a substantial increase of 71.7% year-on-year [2]. Inventory and Demand - Inventory levels are healthy, with total inventory at 129,000 units as of the end of August, a slight year-on-year decrease. The dynamic inventory-to-sales ratio stands at 2.4, indicating a reasonable range [3]. - Since the beginning of 2025, logistics demand has shown signs of recovery, with a year-on-year growth rate of 3.8% in August for road freight turnover [3]. Market Share - In the first eight months of 2025, Foton Motor's heavy truck wholesale market share increased by 5.4 percentage points to 12.6%. Dongfeng Group, Shaanxi Automobile Group, and Foton Motor also saw increases in their terminal sales market shares [3].