To facilitate the rising demand in China’s logistics sector, in March 2021, CIMC Vehicles released the brand of CIMC LIGHT TOWER by DCVC (its first light tower plant), aiming to bring the high-end van-trailer products with technical advantages from overseas market to China market.
In April, CIMC Vehicles released the truck body brand, Terabyte, which distinctly indicates the higher level of design and manufacturing for a truck body, compared to the old technology, GigaByte. Stimulated by the epic scale of e-commerce consumption, the truck body industry for vans and reefers for inner-city distribution is turning into an unseen blue ocean. CIMC Vehicles has formed a strategic business unit to break the ceiling of production capacity and product delivery as well as capture tremendous opportunities for business.
For the first half of 2021, CIMC Vehicles initiated the groundbreaking cooperation with tier-one tractor unit plants in China. In Shaanxi Province, Midwest China, a joint venture plant for truck body of urban dump trucks between CIMC Vehicles and Shaanxi Automobile Group Ltd commenced production in May. An annual production capacity of 15,000 units will further strengthen CIMC Vehicles’ leadership in the industry of truck body for specialty vehicles. In July, CIMC Vehicles partnered with FAW Jiefang Automotive Company to start the Joint Development Project, which helps both parties to increase the market share of cement mixer trucks in China, as the central government is vastly boosting the New Infrastructure development under the Dual Circulation policy.
As for overseas markets, CIMC Vehicles continued to solidify the operation philosophy of Intercontinental Operation, Local Manufacturing. at the beginning of 2021, a new light tower plant with yearly output of 2,500 units for refrigerated trailers (CRTI Polar Bear ) owned by CIMC Vehicles, successfully launched production in Monon, Indiana, US. In February, a new assembly plant with yearly output of 2,500 for refrigerated trailers (Canadian Glacier) owned by CIMC Vehicles, also commenced production in Sarnia, Ontario, Canada.
The Light Tower plan is shining bright
CIMC Vehicles has completed the construction of 21 Light Tower plants around the world, 13 for semi-trailers, six for truck bodies of specialty vehicles and two for refrigerated trucks. According to the OEM’s A-Share IPO plan, the business aims to use most of the net proceeds from the IPO to build an additional six Light Tower plants, namely two for semi-trailers, two for truck bodies of specialty vehicles and two for truck bodies for van trucks and refrigerated trucks, together with a R&D scheme into digitalisation, new sales and retail platform. As of the remaining net proceeds from H-share IPO in 2019, CIMC Vehicles will build two more Light Tower plants for semi-trailers in both Europe and North America.
CIMC Vehicles has strong confidence that by comprehensively establishing the Sophisticated Manufacturing System as planned, it will realise the Made in China 2025 Initiative before the year of 2025.
The most popular CIMC Vehicles products
For 2020, the sales volume of van trailers was 17,744 units, increased by 154.9 per cent year-on-year, judging by the increase rate, the OEM’s van trailer can be deemed as the most popular product. Other than that, CIMC Vehicles produced and delivered 6,049 units of refrigerated trucks, representing a year-on-year increase of 35.8 per cent in sales volume.
For the first half of 2021, sales of heavy duty tractor unit hit a historical high at over 1.04 million with 27.9 per cent increase year-on-year for the whole country in China, which resulted in CIMC Vehicles’ pumped up sales record of tank trailers and cement mixers, and the story is of truck body for van trucks and refrigerated trucks is the same.
The outbreak of Covid-19 in 2020 brought up the social-distancing protocol, which further put a spark on e-commerce consumption, resulting in huge increase in parcel delivery. Moreover, the government has applied stricter regulations to cold chain logistics for foods, medicines and vaccines, this uplifted the whole sales volumes of refrigerated trucks domestically.
CIMC Vehicles’ response to Covid-19
In 2020, despite the impact of the Covid-19 outbreak, CIMC Vehicles rode over the impact of the pandemic in China market through scientific management and control of the resumption of work and production, sales revenue in China market hit a historical high. Market demands and order bounced back since Q3 in the North American and European markets, the Group fully took advantage of its global manufacturing ability and supply chain to cater this situation in overseas markets, especially for refrigerated trailers, container chassis, and van trailers.
The widening applications of vaccines all over the world has been helpful for the industry to turn back to a normal and healthy level in 2021, especially so in China market, the whole country has vaccinated for over 1.5 billion doses up to this moment.
Business goals for 2021 and beyond
The Group will seize the opportunity arising out of the upgrade of semi-trailers in China, actively capitalise on new marketing and retail to increase the sales volume of the second generation semi-trailers, thus expanding its market share. The Group will continuously expand its superiorities in main products of truck bodies for specialty vehicles, as well as truck bodies for van trucks and refrigerated trucks.
During the recovery period and the demand growth period of the semi-trailer market in North America, the Group will implement the comprehensive improvement plans based on the Sophisticated Manufacturing System through optimising the production capacity layout, and strive to provide better products and customer experience for local customers. For European market, the Group will establish a strong team, so as to improve the operating quality of the semi-trailer business in Europe.
As previously disclosed in its prospectus, the Group forecasted that the increase of revenue for the first half of 2021, will land between 29.12 per cent to 44.12 per cent.
Manufacturing trends
Semi-trailer demand in China is strong. As new national standards come into force, the five core models of semi-trailers in China are being transformed. Among the existing semi-trailers, 50 per cent will be phased out in the next three years as a result of factors including performance in driving safety, fuel economy and cargo space, while van trailers, refrigerated trailers and other models will usher in a significant growth opportunity. Meanwhile, the traditional staked-side trailers in the market of China continue to see a decline in sales and are gradually brought out of mainstream markets.
As the actions against ‘overloading and oversizing’ become normal and persistent, specialty vehicles in China, especially environmentally-friendly urban dump truck bodies and light and durable cement mixer trucks, which are major products of the Group, benefit from the efforts of the PRC government for ‘environmental protection’ and against ‘overloading’.
As fresh food distribution and e-commerce distribution in China are developing rapidly, China is taking action against ‘understating the carrying capacitie’ of refrigerated vans and urban distribution trailers, in a systematic and organised manner. The combination of the two drivers results in urgent demand for compliant truck bodies.
In 2021, the demand for semi-trailers in the North American market bottomed out. In the future, the overall demand for semi-trailer in North America will grow at a moderate pace, while the business of the Group will grow organically. In 2021, the demand for semi-trailers in the European market will fluctuate at a low level. After the Covid-19 outbreak, the overall demand will gradually pick up.
Agility is key to success
CIMC Vehicles has a very efficient Board of Directors comprising industry experts and financial elites which is ultimately responsible for strategic development. Besides, as a listed company in both PRC and Hong Kong capital markets, the Group has a very modern organisation and management team to exercise corporate governance to greet with public scrutiny from all over the world. In CIMC Vehicles, Promotion of the Organisation Development has been defined as one of the four cornerstones to support the Sophisticated Manufacturing System.
Organisational development refers to establishing teams and departments with high potentials and ‘terminal to terminal’ plants as well as establishing enterprises with pursuit of the customers’ satisfaction focusing on levers of kicking off the sales and marketing transformation, improving the “Light Tower” Plants and upgrading the product module.
Leading the industry
At the time of publication, CIMC Vehicles is the first and only semi-trailer manufacturer to be listed both in PRC and Hong Kong capital markets and is the only industry player who has strong business presence in China, Europe and North America markets, as well as a sound global supply chain. In the opinion of the Group, the comprehensive establishment of the Sophisticated Manufacturing System will directly and greatly enhance the Group’s long-term competitiveness, as well as rapidly increase the Group’s profitability when macro environment is favourable; and it will also strengthen the Group’s resilience when facing challenges such as the Covid-19 epidemic. The Group has formulated the work plans for comprehensively establishing the Sophisticated Manufacturing System in the three years of 2020-2022. The system will be built based on four cornerstones, namely upgrading the product module, improving the Light Tower plants, kicking off the sales and marketing transformation and promoting the organisational development, as well as 21 specific initiatives as levers. Therefore, the Group can practically implement its strategic planning for the Sophisticated Manufacturing System and create best practices to provide guidance for the development of the industry.
A closer look at stock market listings
CIMC Vehicles is the first ever company to return to A-share Listing from H-share market since ChiNext Reform and Registration-based IPO System, first ever A-Share and H-share Listing of the global high-end semi-trailers and specialty vehicles Manufacturer, and the largest A-Share IPO among automotive manufacturing companies in 2021. CIMC Vehicles, together with its holding company China International Marine Containers (Group) Ltd (CIMC), both enjoy a dual-listing status (A+H) and two fund raising platforms in PRC and Hong Kong, which is the only case for Chinese companies. CIMC Vehicles also holds the fastest record to finish IPO since the ChiNext Market Reform and registration-based IPO system took place. Being listed in A-share market, CIMC Vehicles has been automatically included in the Shenzhen – Hong Kong Stock Connect Program which may significantly boost the liquidity and trading volume of its shares to warrant potential valuation re-rating.
