Agricultural vehicle giants fall into bankruptcy when the wind transforms the future of light trucks

In a market where giants like Juli and Shuangli faced sluggish demand and eventually collapsed, China Wind Farm Group—China’s largest agricultural vehicle producer—has finally secured commercial vehicle production approval from the National Development and Reform Commission. This marks the realization of a five-year dream for the Fengfeng Group, though industry experts remain cautious about its chances in the competitive light truck sector. Lin Lianhua, deputy general manager of Shifeng Group and head of the commercial vehicle program, spoke with calm confidence. "We’ve been waiting for this moment for years," he said, reflecting on the long-awaited opportunity to transition from agricultural vehicles to light trucks. The group has been preparing for this shift for some time. In April 2023, the National Development and Reform Commission announced updates to the automotive product catalog, allowing light trucks to enter production. This milestone signals that Shifeng, already the leader in agricultural vehicle manufacturing, is now stepping into the auto industry, focusing on light truck production. Established in 1993, Shifeng Group has built a strong foundation, with an annual capacity of 1 million three-wheeled agricultural vehicles, 200,000 low-speed trucks, and 1.2 million engines. By 2005, it had achieved sales revenue of RMB 11.6 billion, maintaining top rankings in both low-speed truck production and the country’s top 100 agricultural machinery companies. However, the road to transitioning into light trucks has not been smooth. In 2002 and 2003, Shifeng explored partnerships with Yantai Automobile Manufacturing Plant and China National Heavy Duty Trucks, aiming to expand into the light truck market. But these efforts were blocked by national policies, leading to no progress. By 2004, the agricultural vehicle market was in decline. The implementation of the new Road Traffic Safety Law increased costs significantly, causing a sharp drop in sales across the industry. Faced with this crisis, Shifeng decided to take a bold step: in December 2004, it invested heavily, allocating half of its human resources to establish Shandong Shifeng Commercial Vehicle Co., Ltd.—a move seen as desperate but necessary. Looking ahead, Lin Lianhua outlined plans for 2006, when the company would launch five self-developed light truck models, with a projected annual production capacity of 10,000 units. These models will range from 1-1.5 tons and be priced between 3-5 million yuan. Over time, the group aims to shift focus from low-speed trucks to light trucks, with an ultimate goal of producing 80,000 units per year. Despite these ambitious goals, the path is uncertain. Analyst Zhang Xin from Guotai Junan noted that Shifeng faces stiff competition. With over 40 light truck manufacturers in the market, including industry leaders like Beiqi Futian and Dongfeng, which control the majority of the market share, Shifeng must find a way to stand out. Moreover, Shifeng's traditional market has been rural areas, and shifting to urban centers will be a major challenge. Its products are currently positioned at the lower end of the market, where competition is fiercest and profit margins are thin. Despite the risks, Shifeng remains committed to its transformation. Lin Lianhua emphasized that the company sees light trucks as a stepping stone toward passenger car production. According to national regulations, passenger car manufacturers must have at least three years of commercial vehicle experience. Once Shifeng gains sufficient scale and expertise in light trucks, it aims to enter the passenger car market within the next five years.

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