China's truck industry is facing rapid development

At the recent first China Truck Model Awards Ceremony, industry leaders and professionals praised the remarkable progress made by China's truck sector. However, there is growing concern about how long the current competitive edge can be sustained, especially as global competition intensifies. **I. Key Technologies Need Improvement** Li Qingwen, President of China Automotive News, emphasized that although domestic truck brands dominate the Chinese market in terms of sales volume, this does not equate to having a solid technological advantage. Tan Xiuqing, Vice President of Shandong Automotive Industry Group, strongly agrees. He pointed out that while self-owned brands have significantly narrowed the gap with foreign counterparts in recent years, certain areas are showing signs of divergence as products become more advanced. In terms of research and development, critical components such as axles and automatic transmissions still lack high-tech, independently developed alternatives, and remain heavily reliant on foreign technology. Additionally, key automotive electronics are still dominated by international players. Due to low penetration rates of electronic systems in domestic trucks, many companies have not prioritized R&D in this area. Last year, the Liberation J6, a symbol of national pride, rolled off the production line, and ongoing projects from Sinotruk and Dongfeng Commercial Vehicles indicate deeper design expertise. However, Tan Xiuqing revealed that many new models being developed are actually commissioned by foreign firms, highlighting a dependency on external innovation. **II. Rising Corporate Costs** Earlier this year, news of rising iron ore prices once again put pressure on truck manufacturers' profit margins. Over the past two years, raw material costs have consistently increased, squeezing company profits. Peng Huacheng, a researcher at JAC Heavy Duty Card Market Department, noted that while rising material costs are a major issue, labor and management costs are equally significant. With the implementation of the new labor law at the start of the year, employee protections have been strengthened, adding to the challenges for companies already struggling with cost control and inefficient employment structures. Peng believes that domestic truck companies are starting to learn from foreign best practices, but most efforts remain superficial—limited to adopting concepts without proper integration or adaptation. This has led to internal conflicts rather than real improvements in efficiency. **III. The Relationship Between Zero and Phase Fry** According to Tan Xiuqing, the cost structure of Chinese trucks includes a high proportion of material and processing costs, while R&D investment remains low. “This stems from the early reliance on foreign models and technologies,” he said. Although the government has encouraged independent R&D, many companies are still hesitant or unable to invest properly, often engaging in price wars instead. “This situation reflects unreasonable pricing and an unhealthy relationship between vehicle manufacturers and parts suppliers,” Tan explained. “Some manufacturers prefer to focus on short-term sales rather than investing in future R&D.” Recently, steel prices have surged sharply, yet heavy-duty steel producers haven’t raised their prices much. A senior executive from a truck company, who wished to remain anonymous, told reporters that they are waiting to see if others increase prices before deciding whether to follow suit. “We’re testing our ability to absorb cost pressures. For now, we just wait and see,” he said. An industry expert noted that much of China’s truck success has come from the cost support of parts suppliers. In contrast, foreign suppliers play a crucial role in helping automakers innovate. The current “whole” policy may lead to long-term challenges for Chinese parts companies, as their role becomes increasingly unsustainable.

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