China’s commercial vehicle exports have returned to growth since September 2020, achieving 31 consecutive months of year-on-year increases as of March 2023. The market has been boosted by significant growth in exports to Russia, which has become the lead destination for China’s commercial vehicles, as EU and US sanctions, and western companies pulling out of Russia following its invasion of Ukraine in 2022 continue to impact Russian imports from companies in the North America and Europe regions in particular. In the first quarter of this year, China’s commercial vehicle exports totaled nearly 153,000 units, a year-on-year increase of 30%, with the surge in exports of medium and heavy-duty vehicles contributing to a substantial increase in export value. During the same three-month period, exports of commercial vehicles increased by 81% on a yearly basis to almost CNY 27.3 billion. Exports play an increasingly important role for Chinese commercial vehicle OEMs, accounting for 12% of total sales in 2022 and rising to 16% in Q1 2023.

Strong year-on-year growth shown by China’s commercial vehicle exports

Changing dynamics of top 10 export destinations, as Russia takes the lead

China’s commercial vehicles are exported to nearly 200 countries around the world, with sales largely concentrated in the Latin America, Asia-Pacific and Africa regions. The top 10 destination countries have maintained a share of more than half of the overall commercial vehicle export market, and their combined share increased further over the past two years, accounting for approximately 59% in 2022. We also noticed in our tracker that the landscape of top 10 destinations changes every year and the widely dispersed export regions supported continuous growth of China’s commercial vehicle exports.

As shown in the chart below, the landscape of the top 10 export destination countries has changed significantly before and after the epidemic. It is worth noting that Russia and Mexico jumped into the top five countries in 2022, and then became the top two export destinations in the first quarter of this year. During the period of 2019 to 2022, except for Chile and Vietnam remaining within the top three positions (Vietnam ranked fourth in the first quarter of 2023), the ranking of other major export countries fluctuated by varying degrees.

There is a lot of flux within the top 10 destinations for China’s commercial vehicle exports

In Q1 2023, the top ten export destinations together accounted for 59% of China’s commercial vehicle exports by volume, and 62% of the total export value. With a strong performance of nearly 29,000 units and export value of CNY 8.7 billion, the Russian Federation ranked first in China’s commercial vehicle export countries, accounting for 18.9% and 31.7% of the respective totals. As demonstrated by the graph below, China’s export volume to Russia was relatively low before 2022, with fewer than 5,000 units per year during 2019 and 2020. However, exports increased to over 8,000 units in 2021 due to Chinese OEMs outperforming the global market, which was impacted by widespread supply chain disruptions.

With the outbreak of the Russia-Ukraine war in 2022, leading western brands such as Mercedes-Benz, Scania and Volvo announced their withdrawal from the Russian market, leading to a supply gap that provided opportunities for China’s commercial vehicle enterprises. In May 2022, monthly exports of China’s commercial vehicles to Russia exceeded 2,000 units for the first time, and since then they have maintained rapid month-on-month growth, rising to more than 7,000 units in December last year (almost as high as the 8,000 units recorded for the whole of 2021!). With the recovery of market demand in Russia, China’s commercial vehicle exports continued to rise, exceeding 13,000 units in March 2023; up by 654% year-on-year and 156% month-on-month.

China’s commercial vehicle exports to Russia have soared from the start of the Russia-Ukraine war

Trucks are the main type of commercial vehicles in Russia, with medium and heavy-duty trucks accounting for more than 40%. Therefore, trucks are the predominant type of China’s commercial vehicle exports to Russia, accounting for 95% of total exports in 2022 and 97% in the first quarter of this year, of which heavy-duty trucks (including towing vehicles) accounted for 73%.

Soaring presence of Chinese commercial vehicle OEMs in Russia

For a long time, the Russian medium and heavy-duty truck market has been mainly occupied by western and local OEMs, while local manufacturers led both the light-duty vehicle and bus markets. These enterprises were severely hit by the effects of the Russia-Ukraine war, while Chinese automobile OEMs were the major beneficiaries, particularly in the market for medium and heavy-duty trucks. According to data from the Russian automobile industry association, sales of medium and heavy-duty trucks fell by 15.5% to around 85,000 units in 2022, and foreign and local brands fell by 13.3% and 17.6% respectively. In contrast, sales of commercial vehicles by Chinese enterprises in Russia increased 2.2 times, with their market share soaring from just 8% in 2021 to 31% in 2022. Of Chinese vendors, Shaanxi Automobile, Sinotruk and FAW have all entered the top five OEMs for medium and heavy-duty trucks in Russia.

With the ongoing Russia-Ukraine war, the momentum of China’s exports to Russia is expected to continue throughout 2023. China’s commercial vehicle enterprises are seizing this opportunity to grow their share of sales in Russia, laying the foundation for long-term development of the market and increasing the influence of Chinese brands in the Russian commercial vehicle market into the future.

Growth Momentum continues, with truck exports dominating the market

Trucks have always been the leading type of commercial vehicle exports from China, with a growth rate that has outstripped buses. As a result, the share of total commercial vehicle exports accounted for by trucks has also continued to increase; up from 77% of total export units in 2019 to 92% in 2022. There are multiple factors behind the change, for example global demand for trucks is far larger than buses. Indeed, our Global Electrified and Hybrid Bus and Truck report shows that the truck segment accounts for more than 95% of total commercial vehicle shipments in the global market. Another factor is that passenger transportation/travel was constrained during the COVID19 pandemic, reducing demand for buses further, while construction and engineering projects driven by China’s Belt and Road Initiative have favored the export of heavy-duty trucks.

In the first quarter of 2023, China’s truck exports increased by 32% over the same period last year, exceeding 141,000 units, with commercial vehicles responsible for 93% of the total. In addition, the exports value of trucks stood at CNY 24.3 billion, up 91% year-on-year, largely due to a significant increase in exports of heavy-duty trucks and towing vehicles (with higher unit prices). Meanwhile, exports of buses totaled 11,000 units in the first three months, up by 10% from the same period of 2022, and the export value increased by 24% year-on-year to CNY 3.0 billion.

For more information on the market for new energy commercial vehicles, contact Shirly Zhu, Principal Analyst at Interact Analysis.