The current situation of Chinese truck companies in Africa

The current situation of Chinese truck companies in Africa.

The internationalization and globalization strategy of Chinese trucks is a strategic issue that the truck industry must seriously consider and face in the next decade in order to grow from big to strong. Recently, in the atmosphere of global competition, with low domestic growth prospects and increasingly high market fluctuations, increasing truck exports is an effective way for domestic truck manufacturers to maintain reasonable capacity utilization.

In recent years, Africa’s economy has developed rapidly, and the demand for trucks has increased rapidly, which is very beneficial to my country’s truck exports. With the help of the friendly and mutually supportive relationship between China and Africa, truck companies such as China National Heavy Duty Truck Group and China First Automobile Works have entered the African market early and have achieved certain results in the African market with their cost-effective advantages. At the same time, truck export companies have also built factories in Africa and carried out localized production, which has accelerated the truck industrialization process in African countries.

According to the research report “Bridging Africa’s Infrastructure Gap: How Development Funding Changes Project Expansion in Africa”, China will continue to be the largest source of funds for Africa’s infrastructure investment projects in the future, and China’s truck exports to Africa are also highly competitive and promising.

In recent years, China’s truck exports have remained stable, and the volume of truck foreign trade has also reached a new high. In 2015, the vast African continent attracted 50% of China’s truck exports, and China’s truck exports to Africa have made Africa China’s largest truck foreign trade market.

China’s infrastructure investment in the vast African continent focuses on transportation facilities, including the construction of railways, roads, airports and ports. In addition, Chinese development financial institutions also invest in mining and production platforms in African countries, such as commodity processing and production facilities. The friendship between China and Africa has paved the way for Chinese truck exports.

“In the next three to five years, the total trade volume between Africa and China will reach at least US$500 billion, and the prospects for truck exports are promising. Such a total investment volume will naturally open up new areas for Chinese investment in African countries. East African countries such as Ethiopia, Kenya, Tanzania and Angola are attracting more and more attention.” “Africa has shown us huge business opportunities, and we have also seen a growing demand from Chinese clients for more comprehensive legal advice on investments in Africa.”

All this means that for Chinese truck foreign trade companies, the development momentum of Chinese truck exports to Africa will only get better and better, and the prospects for truck exports are promising.

Current status of investment in Africa by major Chinese truck companies

1.Sinotruk

Sinotruk has been involved in the African market for a long time, with annual sales of more than 1,000 heavy-duty trucks in the French-speaking region of Africa. Since 2007, Sinotruk has established exclusive dealers in Algeria and Morocco, and the cooperation with the dealers has been relatively stable.

The Algerian government has made several policy changes to restrict vehicle imports. Sinotruk has maintained close communication with dealers and taken timely measures to respond to policy changes, ensuring that the number of exported vehicles remains stable at around 1,000 units per year and foreign exchange earnings are around US$40 million. In order to maintain the market, Sinotruk has sent a number of business and service personnel to support and assist dealers in building local market networks.

The Moroccan market is dominated by European brand vehicles. Sinotruk exports them in the form of SKD parts. After importing, dealers assemble them into complete vehicles in their own factories and sell them. After years of running-in and hard work, we have established good systems and procedures in terms of vehicle product quality control and after-sales service. The sales volume is also stable in the top five of many local brands, with annual sales of about 300 vehicles and foreign exchange earnings of about 12 million US dollars.

Tunisia’s policies and regulations are similar to those of European countries, and the overall market demand is relatively small. Due to the import quota system for sales of vehicles, although Sinotruk products have been exported to this country, a stable cooperative relationship has not yet been established.

In the French-speaking countries of the West African Community, including Benin, Burkina Faso, Cote d’Ivoire, Guinea, Mali, Niger, Senegal and Togo, Sinotruk currently has partners in all of the above countries, and has promoted different models by brand according to different market characteristics. The annual export volume to the national markets in this region is roughly around 700 vehicles, with Senegal and Togo being the countries with the largest export volumes.

In Mauritania and Chad, in recent years, Sinotruk’s annual export volume in these two countries is about 60-80 vehicles. Sinotruk’s early partners in these two countries were mainly Chinese institutions, especially Chinese engineering contracting companies that went abroad relatively early. Sinotruk mainly provided them with product and service support to ensure the operation of vehicles and establish a good corporate image. On this basis, it promoted other Chinese companies or local companies to purchase Sinotruk’s products.

In May 2014, China National Heavy Duty Truck Group signed a strategic cooperation agreement with Nigeria’s Dangote Group. Both parties jointly funded the establishment of “Dangote China National Heavy Duty Truck West Africa Commercial Vehicle Co., Ltd.” with a total investment of US$100 million. It is expected to be completed and put into production in the first quarter of 2015. In the year of completion, it is expected to produce 3,000 heavy trucks annually.

In order to better serve Africa, Sinotruk has set up offices in more than 20 African countries with more than 100 permanent staff members; it has established sales and after-sales service networks in more than 40 countries, and its products are highly recognized by the African market. Sinotruk’s international brand “SINOTRUK” has become the most recognized Chinese heavy-duty vehicle brand in many regions and countries in Africa, and its products are used in various fields such as transportation, infrastructure construction, environmental protection and municipal engineering in African countries.

2.China FAW

FAW is the first Chinese auto company to enter Africa and has established sales and service networks in 17 African countries. As early as 1990, FAW established an automobile assembly plant in Tanzania. In 2010, FAW Group and China-Africa Development Fund jointly invested US$100 million to establish FAW Africa Investment Co., Ltd., which is the largest investment project of the Chinese auto industry in Africa to date. On November 9, 2013, FAW Africa Investment Co., Ltd., a subsidiary of FAW Group, signed a memorandum of cooperation with Algeria’s Akofina Group. The two parties will jointly invest to establish a joint venture company to build an automobile assembly plant in Algeria. According to the memorandum, the assembly plant will assemble 10,000 vehicles in the first year after its completion, and the annual output will eventually reach 30,000 vehicles. The joint venture will build a nationwide sales network in Algeria and plans to export vehicles to other African countries and the European market. Currently, FAW Group (China FAW Group co.) is building a new truck and light commercial vehicle production plant in the Port Elizabeth Industrial Center in South Africa. FAW’s South African production base has a total investment of US$100 million. It plans to build a KD assembly plant and sales network in the development zone with an area of approximately 100,000 square meters and an annual production capacity of 5,000 trucks. It will be officially put into production in 2014.

3.Foton Motor

On April 4, 2011, the groundbreaking ceremony of Foton Motor’s East African vehicle assembly production base was held in Nairobi, the capital of Kenya. This is the first Chinese automobile company to set up a production base on the African continent. Foton Motor’s production base in Nairobi adopts the form of vehicle assembly, which is one of the important steps for its radiation to the African region. Foton Motor’s partner in Kenya has set up a joint-stock company, Foton East Africa Company, to operate the factory. According to reports, the factory has a designed production capacity of 10,000 units and an investment of US$50 million. The project is divided into two phases. The first phase was completed in May 2012 with a designed production capacity of 3,000 units. The second phase is scheduled to be completed by the end of 2013. Foton Motor plans to introduce its full range of models to Kenya based on this factory, including pickup trucks, light trucks, light buses, Auman heavy trucks and other products. The initial factory mainly produces Ollin and Aumark. On March 26, 2012, Foton Motor Kenya Sales Co., Ltd. was established. Its business will radiate the entire East African market and provide consumers in the region with better products and services.

4.Dongfeng Motor

In 2010, Qianfeng Group and Dongfeng Motor jointly invested 10 million rand (about 10 million yuan) to establish Dongfeng Motor Africa Co., Ltd., which is mainly responsible for the sales and service of Dongfeng Motor’s light commercial vehicles in the South African market. In 2011, Dongfeng Motor’s first overseas market marketing company opened in South Africa. In 2014, Dongfeng Motor Corporation will use Algeria as a bridgehead for the African market, strengthen publicity, sales and after-sales service in the region, accelerate market development, increase product sales, and create a strategic market.

5.Shaanxi Automobile Group

Africa is Shaanxi Automobile’s traditional market, and its export business is mainly concentrated in North Africa, among which Algeria’s export business accounts for 70% of China’s overseas exports. Exported products include heavy trucks, engineering vehicles, etc., and the marketing model covers various forms such as setting up offices and developing independent and non-independent dealers. Two large overseas maintenance centers have been established in Algeria and Angola.

African dealers talk about Chinese trucks

1.Chinese trucks have obvious cost-effectiveness advantages

Abdul Aziz is the general manager of a large transport company in Ghana. He told reporters that his company has been engaged in the transport industry for 50 years and has used trucks from Europe, the United States and Japan. Many years ago, when Chinese trucks first entered the Ghanaian market, people did not have a good opinion of Chinese trucks. In the past two years, our company purchased five Shaanxi Automobile heavy trucks. In 2015, we became a dealer of Shaanxi Automobile heavy trucks. Abdul Aziz told reporters that in the West African market, most customers used second-hand trucks from Europe and the United States before. With the development of Chinese trucks, everyone’s concept is gradually changing. And as a dealer of Chinese trucks, we will also guide customers to change their concepts.

In recent years, the sales volume of Chinese trucks in Ghana has continued to rise. On the one hand, it is because the market demand in Ghana is growing, and on the other hand, it is because it has squeezed out a part of the market share of European and American second-hand trucks. Every customer knows that quality is important, but the cost needs to be considered when buying. When customers buy a car, they are not only concerned about the price, but also consider reliability, operating costs and other factors. Taking all these into consideration, Chinese trucks have a higher cost-effectiveness.

2.Chinese truck sales in Afghanistan continue to grow

Algeria is the second largest automobile market in Africa after South Africa and plays an important role in the African heavy truck market. In 2013, Asnawi Group started to cooperate with Dongfeng Commercial Vehicle.

The Algerian market is relatively open, which means that local competition is fierce. European brands dominate in Algeria, which is more or less affected by historical and geographical factors. Chinese truck brands have entered the Algerian market for about 6 years. Due to their reasonable prices and high cost performance, they have maintained a rapid growth momentum in Algeria. Chinese brand trucks not only compete with Japanese and Korean brands, but also with European brand trucks.

In 2015, due to the adjustment of Algeria’s local automobile policy, the development of the truck market encountered certain resistance, but Chefion Asnawi said optimistically: “Asnawi Group is building a complete sales and service system, and Dongfeng Commercial Vehicle will be the leader in the Algerian truck market.”

3.Mali dealers help Chinese automakers expand their market

According to reports, Bubu is engaged in transportation business in Mali and also sells auto parts. In March this year, Bubu just became a dealer of Shaanxi Automobile.

Bubu said that in recent years, he saw more and more Chinese trucks in Mali, and he had the idea of becoming a Chinese truck dealer. For the Malians, Chinese trucks entered the Mali market relatively late and have not yet occupied a large market share. In Mali, most of the market is still occupied by European trucks. The market share of Chinese trucks in Mali is about 20% to 25%. However, as a Chinese truck dealer, he will do a better job of promoting Chinese products and increase the good impression of Chinese trucks among the Malians.

The China-Africa Trade Research Center analyzed that as the largest source of funds for African infrastructure investment projects, China’s investment in African infrastructure projects has greatly driven the export of Chinese trucks to Africa. As the popularity and recognition of Chinese brand trucks in the African market increase, Chinese truck companies have begun to accelerate the layout of the African market from both trade and investment aspects. The good performance of Chinese trucks in the African market has also attracted a large number of local African dealers to join hands with Chinese truck companies to jointly explore the African market.

If you want to buy a Chinese truck, please contact us:https://www.shoonida.com/used-trucks-contact-us/

Yutube:https://www.youtube.com/channel/UCUO8u4Nfx8o-zwAzH4KBamg