Demand for China’s heavy and medium trucks and tractors was mixed in Q1/16. Total heavy duty sales, trucks and tractors, rose more than 8% year-over-year in Q1/16, representing a 4.1% quarter-over-quarter increase.

Medium-duty truck sales, on the other hand, rose 11% year-over-year, but contracted more than 22% from the Q4/15. This was reported in the most recent China Commercial Vehicle Outlook, jointly published quarterly by ACT Research and China’s State Information Center (SIC). The outlook includes an overview of the China economy and a review and forecast of China’s heavy and medium-duty truck and bus markets, as well as analysis of OEM market shares within China.

The pace of growth of China’s economy slowed to 6.7% in Q1/16, down from 6.8% the previous quarter. For perspective, full-year real GDP growth in 2015 was 6.9%, down from the 7.4% recorded in 2014 while 2013’s economic growth was 7.7%. China’s real GDP has been trending downward from double-digit levels and is now settling into a new normal in the single-digit range.

“Following rounds of interest rate and reserve ratio cuts in 2015, the fiscal stimulus tree is now bearing fruit in the way of available funds for real estate and infrastructure investment. We believe this, coupled with lower base year comparisons, made for what seems like rapid year-over-year recovery in every commercial vehicle segment during Q1/16,” said Robert Perkins, senior global business consultant at ACT. “As we explained in March, it is expected that China’s heavy and medium truck and tractor markets may show temporary signs of improvement. That said, domestic demand for China commercial vehicles will remain subdued for the foreseeable future, until changes in both the country’s economy and the evolution of its transportation industry have stabilized.”

Perkins also noted, “The country’s transportation industry is undergoing several changes that will impact vehicle demand, including rapidly improving vehicle quality, significant logistics efficiency improvement, and higher capacity vehicles.”