Behind the "counterattack" of natural gas heavy trucks: it is not that diesel engines cannot be bought, but that natural gas engines that are more expensive than 100,000 yuan are more cost-effective
Reporter: Peng Fei Editor: Wei Guanhong
The strong rebound of the heavy-duty truck market in 2023 will directly detonate the entire industry that was still at the bottom last year, and among many models, the sales of natural gas vehicles have increased the most.
"In the 8 years I have been in the industry, I have never encountered this kind of market. When talking about the sales of natural gas heavy trucks this year, a heavy truck dealer from Handan, Hebei Province directly used two words to describe it: hot.
Just a few days ago, heavy truck dealers from all over the country gathered at the Commercial Vehicle Power Branch of Weichai Power's 2024 Business Conference.
In fact, although each diesel engine heavy truck of the same level is more than 100,000 yuan more expensive, the natural gas heavy truck is still favored by many "budget-conscious" car owners and is unique in the market: as of October 2023, the current round of growth of the natural gas heavy truck market since December 2022 has achieved "11 consecutive increases". It is worth mentioning that in October alone, the actual sales of natural gas heavy trucks reached 23,000, a year-on-year increase of 1,478%. The monthly sales of natural gas heavy trucks exceeded 20,000 units only four times, one in 2019 and one in 2020, and the remaining two in September and October this year.
In the past few years, the natural gas heavy-duty truck market has been sluggish. Last year, some agents couldn't even sell a few cars, and the upstream and downstream companies in the industrial chain once reached a life-and-death moment.
In the exchange with the "Daily Economic News" reporter, a number of enterprises, dealers bluntly said that the difference in operating costs caused by the difference in oil and gas prices is the root of today's hot natural gas market, in the context of hot sales, "overnight orders" has become a common scene in the enterprise workshop, which also directly saved a large number of industrial chain companies represented by "gas cylinders".
During Weichai Power's 2024 business conference, the company's management focused on the performance of natural gas heavy trucks
Image source: Photo by reporter Peng Fei
Sales soared: 45 days to pick up a new car
"The biggest feeling is that supply exceeds demand. On the morning of November 19, when he came to Weichai Power (SZ000338, stock price 14.88 yuan, market value 129.851 billion yuan) industrial park again, Zhou Haibo (pseudonym), who was chatting with old friends, emphasized "natural gas".
As a heavy-duty truck dealer from Hebei, the "natural gas" mentioned by Zhou Haibo actually refers to a tractor equipped with a natural gas engine. Compared with diesel engine heavy trucks, which account for the majority of the market, natural gas heavy trucks have not been valued by the market for most of the time due to factors such as regional application.
These models, known as natural gas heavy trucks, have had few sales in the past few years, especially when referring to 2022, which has been called the "worst year in history", Zhou Haibo directly stretched out his palm to count last year's dismal sales.
However, after entering 2023, the bleakness of the market was suddenly replaced by a boom. According to data from the China Association of Automobile Manufacturers, since April this year, the monthly sales of domestic natural gas heavy trucks have exceeded 10,000 units for 7 consecutive months, and the year-on-year growth rate has exceeded 100% for 9 consecutive months.
"In April this year, orders for Weichai's natural gas engines began to outstrip supply, and the peak of sales occurred after June. At the end of October, when communicating with the reporter of the "Daily Economic News", the relevant person in charge of Weichai's market business said.
A heavy truck dealer said, "Last year, the natural gas heavy truck market was sluggish, and many peers couldn't sell a few cars throughout the year, and they couldn't do it anymore." I didn't expect the natural gas heavy truck market to usher in an outbreak this year, especially since the second half of this year, the market has become more and more hot, and it is difficult to find a car. ”
Now, driven by the hot situation of natural gas heavy trucks, the heavy truck market has come out of the downturn in the past two years. In the exchange with the "Daily Economic News" reporter, including China National Heavy Duty Truck, Weichai Power, including business people, the growth of this year's heavy truck market attributed to two aspects: one is that exports have promoted sales growth, and the other is that natural gas heavy trucks have ushered in explosive growth.
The increase in sales of natural gas heavy trucks has become the highest mentioned event among many dealers
Image source: Photo by reporter Peng Fei
According to the latest data from the China Association of Automobile Manufacturers, from January to October this year, the cumulative sales of heavy trucks were 788,000, a year-on-year increase of 37.9%. Among them, 81,000 heavy trucks were sold in October, a year-on-year increase of 68.5%. According to the terminal sales data of the first commercial vehicle network, in October 2023, the actual sales of domestic natural gas heavy trucks were 23,000 units, a year-on-year increase of 1,478%.
Soochow Securities Research Report believes that with the advent of autumn and winter, downstream demand is booming, and the replacement and export of natural gas heavy trucks still support the continued boom in heavy truck sales. From 2024 to 2025, the "policy potential" and "economic potential" are expected to continue to exert force, and the domestic economic recovery, the forced elimination of China IV to promote the replacement of purchases, and the outbreak of the export market are resonant, driving the total volume of the sector to increase.
This has also directly raised the expectations of relevant companies. For the development of the heavy truck industry in the fourth quarter of this year and in the future, China National Heavy Duty Truck (03808. HK, share price of HK$16.4, market capitalization of HK$45.28 billion) recently expressed optimistic expectations in exchanges with investors. China National Heavy Duty Truck said that in the fourth quarter, driven by the natural gas heavy truck market, the domestic market tractor structure will account for more than 50%, of which the proportion of natural gas heavy trucks will be higher, and the proportion of the structure will grow steadily in the future.
"It is expected that natural gas heavy trucks will still maintain a high growth trend in the fourth quarter. During the Weichai Power 2024 Business Conference, Weichai market business related people told the "Daily Economic News" reporter.
Compared with the expectations of companies, the performance of the market is more intuitive. Heavy truck dealer Wu Ran said bluntly: In the past 8 years in the industry, this kind of market has never been encountered.
Entering November, the hot trend of the natural gas heavy truck market continues. On November 20, a dealer surnamed Wang of Shaanxi Automobile Heavy Truck said: "Now there is a price and no car, if you want it, you have to wait at least 45 days now, that is, you will not be able to pick up the car until next year (2024)."
The industrial chain is exploding: manufacturers are "catching orders overnight"
Although the price is more expensive, the cost-effective advantage brought by fuel has made natural gas heavy trucks popular with car owners, and at the same time, the industrial chain company that was still at the bottom last year has made a turnaround this year.
"After June, it was at full capacity, and all the company's executives were 'leaning' on the front line, taking turns on duty to ensure the timely delivery of orders. This state of affairs is expected to continue at least until the end of the year. The relevant financial person in charge of Weichai Power said in an interview with the reporter of "Daily Economic News".
In fact, in the context of the hot market, natural gas engines have also become the target of competition, which also makes the competition pattern of natural gas heavy truck market more concentrated.
Natural gas engine Image source: Photo by reporter Peng Fei
According to data from the research department of CICC, from 2021 to the end of September 2023, the natural gas heavy-duty truck engine market as a whole showed a situation of intensifying the head effect. Weichai Power's market share in the first nine months of 2021, 2022, and 2023 will be 52%, 56%, and 65%, respectively, while Weichai Power will occupy 32% of the overall heavy-duty truck engine market in the first nine months of 2023. In the same period, the share of FAW Group's engine plants and Cummins (including Dongfeng Cummins and Foton Cummins) also increased, achieving 4%, 5%, 8% and 4%, 2% and 17% respectively, while other tail manufacturers showed varying degrees of decline.
This concentrated trend has also become an important factor for the performance of engine manufacturers to rebound. In the first three quarters of this year, Weichai Power achieved operating income of 160.38 billion yuan, a year-on-year increase of 22.9%, and net profit attributable to the parent company of 6.5 billion yuan, a year-on-year increase of 96.3%, nearly doubled.
According to the analysis of Southwest Securities, the growth of Weichai Power's performance is mainly due to the high sales of natural gas heavy trucks. Since the second quarter of 2023, the operating income of natural gas heavy trucks has been significantly higher than that of diesel heavy trucks, thus driving the sales of natural gas heavy trucks to skyrocket.
In addition to engine companies, the whole industrial chain of natural gas heavy trucks is very hot. "At the trough last year, a number of small and medium-sized 'gas cylinder' companies were about to go bankrupt, and this year's market directly brought them back to life. Wu Ran, a heavy truck dealer in Handan, Hebei Province, told reporters by phone.
For this year's hot vehicle natural gas cylinder market, Furui Special Equipment (SZ300228, stock price 7.87, market value 4.528 billion yuan) secretary Yu Qingqing recently told the media, "There is basically no market before mid-February, and then the market gradually recovers, and in August and September, orders have been in short supply, and gas cylinders have been pulled away from the production line, with completely zero inventory." We have rushed to catch up with orders by transforming assembly lines, adding new equipment, and personnel working in two shifts 24 hours a day. ”
Of course, the outbreak of the natural gas heavy truck market has also directly driven the performance of related car companies to skyrocket. In the first three quarters of this year, FAW Jiefang (SZ000800, share price of 9.28 yuan, market value of 43.034 billion yuan) achieved a net profit of 412 million yuan, a sharp year-on-year turnaround, which the company directly attributed to the "expansion of sales of natural gas heavy trucks".
It's not just FAW Jiefang that has greatly increased its benefits. China National Heavy Duty Truck (SZ000951, share price of 16 yuan, market value of 18.798 billion yuan) achieved operating income of 30.764 billion yuan in the first three quarters of this year, a year-on-year increase of 37%, and net profit attributable to the parent company of 655 million yuan, a year-on-year increase of 83.62%. In the third quarter, the company achieved operating income of 10.577 billion yuan, a year-on-year increase of 48.47%, and net profit attributable to the parent company of 159 million yuan, a year-on-year increase of 336.74%.
Who is more cost-effective: the difference between oil and gas prices is left and right
"No one is stupid, they will settle accounts before buying a car. Talking about the reasons for the hot sale of natural gas heavy trucks, Li Tao, a heavy truck dealer from Baoji, told the "Daily Economic News" reporter that the price difference between natural gas tractors and diesel locomotives of the same level is more than 100,000 yuan, and "natural gas vehicles are (more) expensive."
However, Li Tao bluntly said that the advantage of natural gas in the cost of cars is the most direct reason for the hot sales of models, "In January this year, the price of natural gas in individual areas was only 3.3 yuan per kilogram, but it was more than 7 yuan per liter of diesel, which was more than doubled." ”
In fact, for heavy truck users, fuel costs account for nearly 40% of the entire operating cost, which leads to cost-sensitive heavy truck users who choose to replace natural gas heavy trucks, and some choose to purchase new natural gas heavy trucks.
Zhong Weiping, secretary general of the Commercial Vehicle Professional Committee of the China Automobile Dealers Association, believes that the promotion and application of natural gas heavy trucks has a certain regionality, mainly concentrated in Xinjiang, Shanxi, Shaanxi and other central and western regions, which is related to the distribution of natural gas resources and the distribution of infrastructure such as gas stations. The natural advantages of natural gas resources in Northwest China, coupled with the relative perfection of facilities, provide superior operating conditions for natural gas heavy trucks.
"(In terms of fuel cost) a natural gas car (per year) can save 50,000 or 60,000 yuan casually, although it costs more than 100,000 yuan to buy a car (1 car), but considering the service life of at least five or six years, as well as the expectation of natural gas supply, a car can save hundreds of thousands of costs for car owners. Li Tao said.
Compared with the dealer's ledger, the agency's data is more optimistic. According to a recent research report by the research department of CICC, referring to the average fuel price in the third quarter of 2023, it is assumed that the road freight rate is 0.15 yuan/ Tons of kilometers, for a total weight of 49 tons (34 tons of cargo), full load annual mileage of 200,000 kilometers of heavy trucks, natural gas heavy trucks in 5 months of operation (150 days), mileage of 85,500 kilometers can recover relative to the diesel heavy truck purchase cost premium (80,000 yuan), reflecting the use of cost economy; the first year of the user to purchase natural gas heavy truck compared with diesel heavy truck can earn 107,500 yuan more.
According to CICC's research report, since 2023, with the decline in international LNG (liquefied natural gas) prices, domestic natural gas supply has been abundant, and domestic LNG prices have dropped rapidly from 7,000 yuan/ton at the beginning of the year to about 4,000 yuan/ton. According to the data of Zhuochuang Information, the average transaction price of natural gas in September was 4249.18 yuan/ton, while the average national transaction price of diesel was 8152.56 yuan/ton, and the price difference between the two widened to 3903.38 yuan/ton, an increase of 254% compared with January.
In the exchange with the reporter of the "Daily Economic News", Weichai relevant technical personnel said that with the advent of the northern heating season in November, the market expects natural gas prices to rise, which also leads to the sales of natural gas tractors compared with October.
However, in the view of another person related to the heavy truck market, "gas prices have risen recently, but the ratio of oil and gas price difference is 0.63-0.64, 0.7 is a critical value, as long as it is lower than 0.7, natural gas vehicles still have an advantage." ”
In response to a question from a reporter from the "Daily Economic News", a relevant person from Weichai Power reminded that for transportation practitioners, whether fuel filling is convenient enough is also an important consideration for them to buy a car, "although the distribution and number of gas stations in various places have been significantly improved, it cannot be ignored that the current national gas stations can only solve the problem of service radius."
In 2023, when the heavy truck market bottoms out, natural gas heavy trucks will become an important force
Image source: Photo by reporter Peng Fei
The increase in natural gas heavy trucks is considerable, how long can this wave of market last?
At the time of the crazy increase, how long the market of natural gas heavy trucks can last also makes the industry concerned.
In 2017, as natural gas prices continued to fall, the sales of natural gas heavy trucks skyrocketed. However, since the second half of 2017, natural gas prices have soared, and even once exceeded the 10 yuan/kg mark, resulting in the suspension of natural gas heavy trucks.
It is worth noting that due to the adjustment of supply and demand structure and the international situation, domestic natural gas prices will rise across the board in 2022, with an average annual price of 5,500 yuan/ton, and even hit a high of 9,000 yuan/ton in early September. However, since 2023, domestic natural gas prices have turned downward due to factors such as the improvement of the supply and demand pattern, the influx of low-cost incremental natural gas, and the correction of international gas prices.
Once the price of natural gas fluctuates, will the natural gas heavy truck market repeat the mistakes of the past?
In Li Tao's view, natural gas heavy trucks (relative to 2022) are currently in a market environment with low gas prices and significantly improved demand, which has created conditions for the continued growth of the natural gas heavy truck market, coupled with the extremely low level of the same period last year, so the natural gas heavy truck market "continuous increase", and even the probability of high growth "continuous increase" should be 100%.
From the supply side, the completion of pipelines such as "Power of Siberia 2" in the future will bring considerable increments. At the same time, the domestic offshore gas source is sufficient, and there are many receiving stations. "There is no problem with the supply guarantee capacity and peak regulation capacity of natural gas. We judge that natural gas prices will stabilize and remain within a reasonable range in the future. The above-mentioned Weichai power market business related people said.
In fact, with the steady laying of LNG refueling stations across the country, the service radius of refueling stations may no longer be an issue. According to the data of the national LNG refueling station handbook in 2023, the number of domestic LNG refueling stations reached 5,659 by the end of 2022, mainly distributed in intercity highways, national and provincial trunk roads, express trunk roads and other areas, with a CAGR (compound annual growth rate) of 13% from 2017 to 2022.
From the perspective of long-term planning, Shenwan Hongyuan said that domestic LNG refueling stations are in a stage of rapid expansion. With the improvement of supporting infrastructure, the convenience of using natural gas heavy trucks will be significantly improved, and the replacement of natural gas heavy trucks with fuel heavy trucks will be promoted.
CICC believes that considering that the cruising range of 1,000 liters of on-board LNG cylinders is 800 kilometers when fully liquid, with the continuous increase of LNG refueling stations, end users can find refueling stations within 800 kilometers, and the convenience of refueling and the dilution of storage and transportation costs will be more obvious, which is expected to support the continuous penetration of natural gas heavy trucks.
Shenwan Hongyuan believes that the supply of capacity in the heavy truck industry is sufficient, and the intensification of competition has led to a decline in freight rates, and the freight advantage of natural gas heavy trucks is highlighted. The increase in the penetration rate of natural gas heavy trucks will further lower freight rates, thereby accelerating the replacement of fuel heavy trucks.
With the continuous improvement of the technical level and the continuous expansion of application scenarios, the market prospects of natural gas heavy trucks continue to improve. "Originally, natural gas trucks were mainly used for short- and medium-distance transportation such as coal and industrial products, but now they have been expanded to cold chain, long-distance logistics and other scenarios, and the application scenarios will be more diversified in the future. Weichai power market business related people said.
In the view of Wu Ran, who has been in the heavy truck industry for 8 years, the only thing that blocks natural gas heavy trucks may be the current situation of more cars and less goods, but with the steady recovery of the economy, next year's market is also worth looking forward to.
National Business Daily