Summarize：In the first quarter of 2009, a total of 48 enterprises in China manufactured 22,906 units of various types of buses & coaches, down by 35.80% and 12,775 less than that of the same period last year. In the meantime, China sold 23,495 units, down by 36.44% and 13,469 units less than that of the first quarter in 2008. In sharp contrast with the previous three years, which saw the bus & coach building industry expanding by 25.48%, 21.87% and 16.63% y/y respectively, the start of 2009 has sent the economic chill down to the spine of the whole industry in China.
The statistics in the table shows that the bus & coach industry in the first three months of 2009 was characterized by：
A. loss of color of previous bright spots
B. absence of pillars to support the whole sector
C. contraction across the whole industry
D. declining export volume
We have subdivided the bus & coach market into 36 segments. Among them, 26 segments managed to sell the products while the rest 10 segments failed to market any of its models. Only 5 segments witnessed positive growth. Apart from the 8-9 meter coach, the other four segments include:
1. Above 12-meter intercity bus
The intercity bus measuring over 12 meters long was accepted by the market in recent two years. In 2008, the market had a total number of 552 units of this type of bus. Along with the improved road conditions across the nation, it is expected that the market for 12-meter-plus intercity bus will witness further expansion. However, its sales volume accounted for less than 1% of that of the whole industry. Given this, its expansion was of little help to the overall contraction of the industry. In addition, thanks to its high technical requirements, only a few handful bus builders are now involved in this sector. In the first quarter, 6 enterprises sold buses of this type. The top player, Zhejiang Youngman took 55.38% of the whole market. For detailed information, please refer to Table 2
Table 2
2. 5-6 meter intercity bus
In the first quarter, 5-6 meter intercity buses saw their sales volume reach 1,746 units, up by 2.70% y/y. The major contributor for the growth of this segment is Xiamen Kinglong, whose sea lion series light-duty bus XMQ6520 went into production in later half of 2008 and its sales volume rose by 266 units in the first quarter of 2009. As the bus builder continues to better its marketing networks of the new model, it is expected that the company will secure even more orders for the bus. Take Xiamen Kinglong aside, the sales volume of 5-6 meter intercity bus was down by 13.28% y/y. Players in this market segment are few. For detailed information, please refer to table 3.
Table 3
3. Above-12 meter sleeper bus
As is shown from table 1, the sales volume of 12-meter-plus sleeper bus went up by 32.08% y/y. However, due to the small size of the market, its sales volume of 70 is just a drop in a bucket.
4. 6-7 meter buses
Table 4
In recent years, it became quite obvious that city buses were growing larger and larger. The light-duty city bus has never been regarded as the mainstream of the city bus market. In the first quarter of this year, however, the 6-7 meter city bus witnessed a surge in its sales volume, which can be explained by the following two reasons. One is the pressing need to cut costs. As the emission standards were upgraded from Euro Ⅱ to Euro Ⅲ, the costs for light-duty buses went up significantly. In the meantime, operators failed to see a big change in their economic returns. As a result, it has been generally agreed that operators need to cut their purchasing costs. In addition, as building technologies for gas-powered bus mature, those places with rich gas supply saw a remarkable increase in their demand for gas-powered buses. For example, CDK6661 of Chengdu Bus and CKZ6650 of Chongqing Hengtong, both of which are powered by gas, saw their sales volume reach 120 units and 92 units respectively. The second is the higher requirement on transport efficiency.
Traditionally, light-duty intercity buses are used for rural passenger transport. As the light-duty intercity bus has fewer seats and offers passengers with less travel comfort, it surely cannot compete with light-duty city bus. Given this, when it comes to replace new buses, some operators tend to choose light-duty city buses. In the first quarter, the 6-7 meter city buses saw a big increase in their sales volume, but it accounts for less than 10% of the whole bus market. So it can barely change the gloomy weather cast over the whole bus market.
From the statistics in the first quarter, it can be seen that the light-duty bus market is much better that the medium- and large-sized bus markets. However, due to the spur of the “Vehicle Going to Rural Area”, a large number of mini-buses are expected to enter the rural market, which will squeeze the market room for light-duty buses. Before the export market turns for the better, the light-duty buses are still facing quite a lot of uncertainties ahead.
The four bright spots in the bus market have a combined of 2,507 units sold, accounting for only 10.67% of the total sales volume, which means about 90% of the bus market was experiencing a downturn and these bright spots had little impacts on the whole market trend.
Absence of pillars to support the whole sector
In the first quarter of 2008, the city bus was the major driving force in the bus market. Despite of the poor performance of intercity bus, the sales volume of the whole market was still up by 16.63% y/y thanks to an impressive rise of 36.86% of city bus market. In sharp contrast, the whole industry lost its pillars in the first three months of 2009. The four major series buses all experienced downturn. Of the ten segments, only light-duty city buses was performing well, which however, cannot reverse the downward movement of the whole sector. For detailed information, please refer to Table 5.
Table 5
Without a single pillar in the market, the overall bus market witnessed a temporary contraction. Right now, as uncertainties still lie ahead for the export market, a real recession of the bus market is inevitable if the domestic market fails to provide stronger market demands.
Currently, a series of realities are disheartening for domestic bus market.
First, buses are at a disadvantage point while vying for passengers with trains. Since Apr. 1, China’s railway ministry increased train speed on a large scale. Thus, its passenger transport capacity was up by 10.6%. The travel time between some cities was greatly shortened. For example, it takes 1 hour and 55 minutes to travel from Hankou to Hefei, 5 hours and 40 minutes less than that previously needed. It takes 7 hours and 56 minutes less now to travel from Hankou to Nanjing. Against such a backdrop, some road passenger transport routes can hardly compete with railway transport in terms of price, efficiency, safety and travel comforts.
Second, the tourist market has an oversupply in passenger transport capacity. On Apr. 5 this year, Nanchang city in Jiangxi indicated that the city government would not approve of the establishment of new tourist transport companies in the next two years. Currently, the city has eight companies involved in tourist transport and the market has already reached the saturation point. Even though Nanchang is an individual case, but it epitomizes the oversupply of the nationwide tourist transport market. Affected by the global economic downturn, the conflict between supply and demand is felt even more acutely. With a declining number of tourists, a restructuring of the tourist transport market is looming large ahead. Some companies involved in passenger transport have already been squeezed into tourist transport market. For example, Hubei Provincial Passenger Transport Group, the largest of its kind in Hubei Province, set up Wuhan Travel Distribution Center with a total investment of RMB 18 million in late March, 2009.
Third, the rural passenger transport is now encountering some policy bottlenecks. Even though the state council rolled out the measures to better meet the rising demand for transport services in rural areas, some local governments have not yet taken any concrete actions for fear of shouldering more financial burdens.
Fourth, city buses are somewhat restrained by media reports of new energy bus models. Since the start of the year, the city bus market has been bombarded by the media reports about new energy buses. The statistics show that the sales volume of city buses has lost high growing momentum registered in the past two years. In the first quarter, China sold 7,530 units of city buses, down by 35.54% y/y. The large- and medium-sized city buses plummeted by 45.60%, taking the lead in downturn of the six segments of bus market. It has to be noted that the new energy buses have to develop according to its own pace. Given the fact that the key parts & accessories of the environmentally friendly buses have not yet realized localization, it is too early to splash so much money in the sector. It is advisable that the more attention should be given to traditional city buses.
