Yuchai sold 500700 units of engines in 2013, will secure 530,000 units and challenge 560,000 units in 2014 to pave the way for achieving sales of 1,000,000 units in 2018.

These "dazzling figures" are the midterm target set by Yuchai Machinery Co., Ltd. (Yuchai). The target is probably more difficult to fulfill compared to the strategic plan of "building another Yuchai" mapped out a couple of years ago.

2013 saw the restorative growth of the commercial vehicle market. Yuchai seized the opportunity to achieve sales of over 500,000 units once again. Will the largest independent engine manufacturer in China fulfill the anticipatory target in the face of a more uncertain market environment in 2014?

Let's take a look at the report of cvworld.cn from Nanning, Guangxi.

Yuchai engines on show

Growth beyond expectation in 2013

Thanks to the restorative growth of the commercial vehicle market in 2013, key vehicle and engine manufacturers developed rapidly and most grew beyond expectation in early 2013. Yuchai achieved good results, too.

On January 18, Yuchai held the 2014 marketing service conference in Nanning, announcing that Yuchai was the first multi-cylinder diesel engine manufacturer in the industry to restore its annual sales to 500,000 units, maintaining the sales lead in the industry.

"Yuchai set an annual sales target of 492,000 units in early 2013 and actually sold 500,700 units in 2013, with a fulfillment rate of 101.78 percent." Yuchai's management attributed Yuchai's fast growth to several factors. First, the industry grew fast overall, the commercial vehicle market reversed the trend of decline for two consecutive years from 2011 to 2012 and registered a growth rate of 6.4 percent in 2013, and the heavy-duty truck segment grew by 21 percent, creating a favorable market environment for Yuchai's growth.

Second, as an independent engine supplier, Yuchai has input mass resources into lean production, technical R & D and quality improvement in recent years, the input yielded more in 2013, the market and customers' recognition of Yuchai engines has been boosted.

Third, as a manufacturer of all series of diesel engines, Yuchai can enjoy "bonuses" from all segments in market recovery with products covering segments like medium & heavy-duty truck, light-duty truck, bus, new energy, natural gas and construct machinery.

A new product of Yuchai in 2014 was launched

According to the information released at Yuchai Marketing Service Conference, Yuchai sold 500,756 units of engines in 2013, up 15 percent (435,000 units) from 2012, registering a growth rate above the average growth rate of the diesel engine industry and increasing its market share by 1 percent. Concretely, in 2013, Yuchai sold 245,000 units of truck engines, up 20 percent year on year; 125,000 units of bus engines, up 8 percent year on year; 33,000 engines abroad, up 20 percent year on year; and 105,000 units of general engines, up 31 percent year on year. In terms of marine engine and passenger vehicle engine sales, Yuchai was almost even.

"We well fulfilled the specific segment targets set in early 2013, too," said Wang Limin, vice general manager of Yuchai, adding, "The overall target of these specific segments was 259,000 units and a fulfillment rate of 90.3 percent by late 2013. Segments like truck engine, gas engine, hybrid engine, large marine engine and excavator engine fulfilled their annual targets."

The success in 2013 boosted Yuchai's ambition.

Challenge 1,000,000 units, double sales in five years

The reporter of cvworld.cn learned that Yuchai's management has adjusted the midterm plan and set a more challenging five-year target on the basis of the fast growth in 2013.

"We planned five strategic directions in Yuchai's midterm target from 2014 to 2018." Zhong Yuwei, deputy general manager of Yuchai, introduced at the conference. I "scale doubling": Increasing the annual sales and sales revenues of Yuchai engines to 1,000,000 units and 40 billion yuan in 2018 respectively; II "position consolidation": Enhancing Yuchai's core competitiveness of "leading and applicable products and services, fast response"; III "Professionalism and value adding": Being committed to innovation and lean operation, and maintaining technical lead; IV "Strategic alliance": Forging strategic partnerships with market and technical leaders; V "Harmony & win-win": Actively performing social responsibility and growing with related parties.

Also, Yuchai's management thought that fulfillment of the target in 2014, the first year after the adjustment of the midterm plan will heavily determine the success of the strategic plan.

Various Yuchai-powered commercial vehicles

2014 is critical to target of securing 530,000 units and challenging 560,000 units

"Our sales target in 2014 is securing 530,000 units and challenging 560,000 units, up 6 percent and 12 percent year on year respectively. Concretely, we will sell 262,000 units of truck engines, 138,000 units of bus engines, 120,000 units of general engines, 40,000 units of engines abroad, as well as 40,000 units of passenger vehicle engines and marine engines." Wang said.

Also, he thought that the domestic auto market would have mixed performance affected by the macroeconomic and policy environment. On the one hand, the domestic economy will develop stably, the GDP, fixed assets investment and exports are expected to grow by 7.5 percent, 20 percent and some 10 percent respectively; on the other hand, affected by successive implementation of the national IV emission standards across the country, the demand of the truck market was overdrawn in 2013, causing some impact to the market in 2014.

"We estimate that the overall demand of the truck market will basically be even, and the heavy-duty truck segment is expected to drop by 5 percent annually due to the facts that the demand was overdrawn and the national IV emission standards came into effect in 2013. The 5m+ truck market is expected to grow by 5 percent, the bus segment will rebound and grow by 10 percent on bulk purchasing across the country, the segments of medium & high-end commercial vehicle, tour bus, school bus, new energy bus and natural gas bus will maintain fast growth." Wang said.

According to sources, to cope with challenges from the market and competitive products and outperform the industry, Yuchai has worked out a series of key working measures. For example, "In terms of national IV, we will continue seizing opportunities, rely on the technical advantage of electronically-controlled products and the capability of system coordination, consolidate the advantage of medium-duty truck engines, and make great efforts in the heavy-duty and light-duty truck segments; in terms of organizational reform, we has established the department of special vehicle engine marketing, refined offices, adding three offices in Weifang, Futian and Shenzhen to ensure considerate service for customers and fast response to the market; in terms of system construction, Nanning Base of Yuchai R & D Center has just been inaugurated, our lean production project will advance in depth and the target of improving quality by 100 percent in three years will be fulfilled as scheduled; in terms of service, we will practice Yuchai's 'fast and sincere' service manager system, further intensify electronic control skill trainings and conduct service management specific to new-generation owners."

Yuchai 2.0L YC4D20-50 national V diesel engine

In 2014, opportunities and challenges will coexist in the commercial vehicle industry. Diesel engine manufacturers like Yuchai and Weichai have set challenging targets and strategies, showing engine competition will be increasingly fierce. Particularly, with the superiority over other engine manufacturers in the heavy-duty truck engine segment and sales revenues of over 100 billion yuan, Weichai, the largest opponent of Yuchai, intended to encroach on Yuchai's share in the medium & light-duty engine segment and the bus engine segment in 2014. The competition between Yuchai and Weichai will become increasingly fierce.

Obviously, amid the fierce competition, Yuchai will still make all-out efforts to meet the challenge despite its outstanding performance in 2013. The marketing service conference undoubtedly sounded the bugle of Yuchai.

(Xie Guangyao/cvworld.cn)