In a rapidly evolving market, giants like Juli and Shuangli faced declining sales and eventually went bankrupt, while China Wind Farm Group, the leading producer of agricultural vehicles in China, took a significant step forward. On February 24th, the company finally received approval from the National Development and Reform Commission for commercial vehicle production qualifications. After five years of anticipation, this milestone marked a major transformation for Fengfeng Group. However, industry experts remain cautious, noting that despite the progress, the road ahead is still uncertain.
For over five years, Fengfeng had dreamed of producing its own light trucks. Now, with the official approval, the dream is becoming a reality. Lin Lianhua, deputy general manager of Shifeng Group and head of the commercial vehicle program, spoke calmly about the transition. He emphasized that the company is well-prepared, having been ready since April when the National Development and Reform Commission announced the automotive product catalog, allowing light trucks to enter mass production.
Founded in 1993, Shifeng Group has built a strong presence in the agricultural vehicle sector, with an annual capacity of 1 million three-wheel vehicles, 200,000 low-speed trucks, and 1.2 million engines. By 2005, it achieved revenue of 11.6 billion yuan and held the top spot in low-speed truck production for six consecutive years. Despite its past success, the shift to light trucks has proven challenging.
In 2002 and 2003, Fengfeng attempted to collaborate with Yantai Automobile Manufacturing Plant and China National Heavy Duty Trucks to move into the light truck market, but these efforts were blocked by national policies. The turning point came in 2004 when new traffic regulations drastically impacted the agricultural vehicle market, causing a sharp decline in sales. Faced with a critical decision, the group chose to transform.
On May 1, 2004, the implementation of the new Road Traffic Safety Law increased the cost of agricultural vehicles by nearly 2,000 yuan annually, accounting for 40% of the total price. This led to a drop of over 60% in sales for major manufacturers like Shifeng. In response, the company invested heavily, allocating half of its resources to establish Shandong Shifeng Commercial Vehicle Co., Ltd. — a bold move that signaled its commitment to the transformation.
Looking ahead, Lin Lianhua outlined plans to launch five self-developed light truck models with a load capacity of 1-1.5 tons and a price range of 3-5 million yuan. The company aims to produce 10,000 units annually and eventually reach a capacity of 80,000 units per year. However, the challenge lies not just in production but in gaining market acceptance.
Analyst Zhang Xin from Guotai Junan pointed out that the light truck market is highly competitive, with over 40 companies vying for market share. Established players like Beiqi Futian, Jiangling, and Dongfeng dominate the market, making it difficult for newcomers to break through. Additionally, Shifeng’s traditional distribution channels are focused on rural areas, and expanding into urban centers will be a major test.
Despite the challenges, Shifeng remains confident in its strategy. Lin Lianhua emphasized that the company sees the transformation as part of a broader vision. With experience in commercial vehicles, Shifeng plans to use light trucks as a stepping stone to eventually enter the passenger car market within the next five years. As the landscape continues to evolve, the path ahead may be uncertain, but the company is determined to carve out its place in the automotive industry.
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