Truck high horsepower trend is apparent 2017 inventory of the internal combustion engine market

In 2017, China’s economy steadily progressed in the overall tone of “stability for progress” and the supply-side reform continued to deepen. In addition, the implementation of the government's One Belt and One Road Strategy enabled more and more Chinese companies and products to go abroad and “air pollution prevention and control actions”. The implementation of the Plan directly stimulates related industries, and the rapid development of national projects such as the start of construction, e-commerce logistics, and urban freight transport has boosted the demand for related vehicles. This, together with the continued improvement in the foreign economic environment, has resulted in various favorable factors. Under the comprehensive effect, China's internal combustion engine industry has achieved growth of more than 4%.
2017 National Internal Combustion Engine Sales Volume 2017 National Internal Combustion Engine Sales Volume

According to the data from the China Internal Combustion Engine Industry Sales Monthly reported by the China National Internal Combustion Engine Industry Association, the national internal combustion engine sales volume in December was basically the same as that of the previous month, which fell slightly year-on-year, and the year-on-year cumulative sales volume increased slightly. In the case of low sales growth of most internal combustion engines in 2017, the high-speed growth of diesel internal combustion engines and internal combustion engines for construction machinery is relatively eye-catching.

It is reported that in December 2017, China’s internal combustion engine sold 5.1919 million units, which was a month-on-month decrease, which was a decrease of 4.29% year-on-year. The annual sales amounted to 56.4353 million units, a year-on-year increase of 4.11%. Somehow, the total scale of internal combustion engine sales in 2017 was still not nearly. Three years (2014-2016) of the level of 55 million units.

9.15% increase in total power

However, it is worth mentioning that in terms of power, in December 2017, 253,303,100 kilowatts were completed, a decrease of 5.25% from the previous month and a year-on-year decrease of 0.56%. The year-to-year cumulative completion of 266,879,700 kilowatts was a cumulative increase of 9.15%, and the internal combustion engine power in 2017 was a record. The new high, especially the diesel engine's power, increased by a cumulative 34% year-on-year, the best in history. The reason is that in the commercial vehicle sector, especially the heavy-duty truck industry, the trend of market preference for high-powered vehicles is obvious. In 2017, major heavy truck companies such as FAW Jiefang, CNHTC, Shaanxi Auto Heavy Truck and SAIC Hongyan all launched models with more than 500 horsepower. The kingpin of road tractors also gradually increased from 375 hp to 420 hp in the previous segment to 420 hp to 480 hp, of which the 460 hp segment was sought after by heavy truck users.

Diesel engine growth is significantly higher than gasoline engine growth

Although diesel engines and gasoline engines have grown, but from the data point of view, the growth rate of diesel engines is significantly higher than that of gasoline engines. The year-on-year cumulative growth of the diesel engine market was 13.04% year-on-year, and the cumulative year-on-year growth of the gasoline engine market was 3.21%. Most of the sales in various market segments showed different degrees of growth, and construction machinery performed the best.

Specifically, in December, diesel engines sold 481,900 units, an increase of 7.69% from the previous period and a year-on-year increase of 5.25%. The cumulative sales volume for the year was 5.5561 million units, a cumulative increase of 13.04% year-on-year; gasoline engine sales were 4.799 million units, a decrease of 0.04% month-on-month and a year-on-year decrease. 5.16% of the total sales of 50,889,500 units for the year, a cumulative increase of 3.21% over the same period last year.

Yuchai Engine Yuchai Engine

The major increase in diesel engines was mainly due to the rapid increase in the use of commercial vehicles and construction machinery as the mainboard blocks. In 2017, China’s heavy truck sales reached 1.117 million units, an increase of more than 50%, and light truck sales also achieved 17.9% of the 1.171 million results. Growth, despite slight declines in micro-cards and buses, overall, commercial vehicle sales exceeded 4.16 million units, an increase of nearly 14% year-on-year. In 2017, China’s construction machinery industry recovered in an all-round manner, with the economic cycle economy, national “One Belt and One Road” construction and replacement demand, and all types of construction machinery: excavators, loaders, and cranes all exhibited 40-100% growth. The internal combustion engine for construction machinery showed an explosive growth trend in 2017. Take the excavator as an example. In 2017, all types of excavation machinery in China reached 140,000 units, an increase of 99.5% year-on-year. The annual sales of construction machinery used in internal combustion engines totaled 738,400 units, a cumulative increase of 56.53% year-on-year, and the cumulative sales of agricultural machinery used in internal combustion engines totaled 3.819 million units, a year-on-year cumulative increase of 11.41%. In contrast, the passenger vehicle industry, in 2017, China’s passenger vehicles Sales volume was 24.71 million units, an increase of only 1.4%, while passenger vehicle internal combustion engines sold a cumulative total of 22,054,000 units for the year, a cumulative increase of 2.99% year-on-year. It seems that the increase in gasoline engine sales is also lower than expected.

Single-cylinder diesel engine supporting a decline in multi-cylinder increase significantly

In 2017, single-cylinder diesel for agricultural machinery decreased year-on-year. In December, the sales of single-cylinder diesel engines totaled 79,600 units, a year-on-year increase of 1.88% and a year-on-year decrease of 2.58%. The cumulative sales for the year amounted to 1,150.9 thousand units, a cumulative decrease of 2.29% year-on-year. The top five companies are: Changchai, Smart Agriculture, Sanhuan, Sifang, and Jinfei. Their sales of single firewood products account for 87.90% of the industry's sales volume. Its main support in the field of agricultural machinery, in December sales of 77,800 units, an increase of 1.80%, a year-on-year decrease of 2.84%, the cumulative sales of 1,125,300 units in the year, a cumulative decrease of 2.81%.

2017 Multi-cylinder Diesel Engine Market Distribution 2017 Multi-cylinder Diesel Engine Market Distribution

The multi-cylinder diesel engine market has a high growth rate. In December, multi-cylinder diesel engine companies sold a total of 402,200 units, an increase of 8.92% from the previous period and a year-on-year increase of 6.95%. The cumulative sales volume for the year was 4,405,100 units, a cumulative increase of 17.88% year-on-year. The single-cylinder machine agricultural machinery market continued to decline due to the transformation of the agricultural machinery industry, low product in line with policies, reduced subsidies for agricultural machinery, and large sales base in the previous period.

Strong Hengqiang "First Army" continues to lead

From a branch perspective, sales of the top ten sales such as Weichai , Yuchai, Yunnei, Quanchai, and Xichai accounted for 71.13% of total sales. Among the top-selling companies, cumulative sales of Weichai, Yuchai, Yunnei, Fukang, Dongkang, and Xinchai have increased by a large margin from the previous year by 14% to 56%. Among the many supporting fields of multi-cylinder diesel engines, commercial vehicles accounted for 65.80% of the total, with sales of 279,900 units in December, a year-on-year increase of 12.70% and a year-on-year increase of 5.19%. The cumulative sales for the year were 2,898,600 units, a cumulative increase of 18.18% year-on-year. Including Weichai, Yuchai, Jiangling, and Fukang, the sales volume was higher. Yuchai has always maintained a leading position in the bus markets that are being competed by various multi-cylinder companies.

2017 Multi-cylinder Gasoline Engine Business Market Distribution 2017 Multi-cylinder Gasoline Engine Business Market Distribution

Weichai has a long-standing advantage in the heavy-duty truck market. With the major sales of car companies such as Shaanxi Auto Heavy Duty Truck Co., Ltd. and Liberation Qingdao, weichai continues to lead the development of heavy-duty engines. However, Yuchai’s position in the field of passenger car engines is equally difficult for other companies to shake. In addition, the matching ratio of Yunnei and Fukang Power on the light truck also showed a momentum of growth.

Small gasoline engine increases in sales

The growth rate of small gasoline engines for agricultural machinery is higher. In December, small gasoline engine companies sold 943,500 units, a growth of 26.25% from the previous period and a year-on-year decrease of 3.83%. The cumulative sales volume for the year was 8,844,100 units, a cumulative increase of 5.85% year-on-year. The top five sales companies are Huasheng, Longxin, Runtong, Zhongjian, and smart agriculture. Among the major supporting industries, sales of garden machinery used were 323,100 units, a year-on-year increase of 14.90% and a year-on-year decrease of 16.40%. The year's cumulative sales amounted to 3.4129 million units, a year-on-year cumulative increase of 1.68%; agricultural machinery sales were 242,900 units, an increase of 33.13% compared to the previous period. The year-on-year increase was 25.66%, and the cumulative sales volume for the year was 2,218,300 units, a cumulative increase of 24.81% over the same period last year. The global economy is picking up. The export situation is improving. Small gasoline engines are more of an export product, driving the overall improvement of the small gasoline engine industry.

Annual sales of multi-cylinder gasoline engines increased slightly year-on-year. Sales of multi-cylinder gasoline engines in December reached 2,263,300 units, a decrease of 4.23% from the previous period and a year-on-year decrease of 2.61%. The cumulative sales volume for the year was 2,035.31 million units, a cumulative increase of 3.23% year-on-year. SAIC-GM-Wuling, FAW-Volkswagen, and Shanghai Volkswagen Powertrain ranked among the top ten sales. Its overall sales accounted for 52.36% of the industry’s sales. The cumulative sales growth of Shangtong Wuling, Dongfeng Nissan, Geely, Shangtong Wuhan, and Dongfeng Honda Automobile was more obvious, with an increase of 10%-83%. Multi-cylinder steam is mainly used in passenger vehicles, accounting for 95.16% of the total sales. In December, it sold 2.1648 million units, a decrease of 4.56% from the previous period and a year-on-year decrease of 3.84%. The cumulative sales volume for the year was 21,937,700 units, a cumulative increase of 3.34% year-on-year.

Looking into the year 2018, from the perspective of the macro environment, since the victory of the party’s 19th National Congress, China’s economy has grown from high-speed growth to high-quality development, and the demand for the internal combustion engine market will also evolve toward more qualitative demands. In addition, in 2017, the State Council issued the “About To further promote the idea of ​​reducing logistics costs and increasing efficiency to promote the development of the real economy, the market's demand for high-horsepower engines and new energy will increase. Coupled with the impact of rail freight on highway logistics, the internal combustion engine industry is expected to usher in a downward adjustment.

Taking heavy trucks as an example, the industry generally believes that there will be an overall decline of about 25% in 2018, but there is also a lot of good news. Frontier construction, rural construction, and construction of the central and western regions are all speeding up. City construction slag trucks and truck mixers have ushered in good opportunities. The machinery industry is expected to usher in a 10-20% growth. China's GDP in 2018 is expected to reach a growth rate of 6.5%. The One Belt and One Road will continue to shift domestic surplus production capacity overseas. This is an opportunity for the internal combustion engine industry. Challenges and opportunities coexist. In 2018, the internal combustion engine industry will rise or fall. The market will give an answer after 350 days.

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