A recent regulation indicates a continued tightening in the most polluted areas of China, supporting the ongoing shift to natural gas tractors and trucks with newer emission technologies. Other notable government policy changes have brought a one-time increase in heavy and medium duty market populations, according to the most recent China Commercial Vehicle Outlook, jointly published quarterly by ACT Research and China’s State Information Center (SIC).

In the short-term, heavy trucks and tractors, as well as medium duty trucks, are expected to see year-over-year growth continue in Q3/17.

“Pro-growth, but at a lower rate, continues to be the primary focus as a current level of macroeconomic activity,” said Robert Perkins, senior global business consultant at ACT Research. “With the current supply-side restructuring and general slowing of the macroeconomy, we anticipate that infrastructure investment will be China’s one economic counterbalance.”

For the Chinese market, sales of medium duty and heavy duty trucks, including tractors, divide into two categories: those bought to increase the vehicle population and those bought as replacements. Three factors determine commercial vehicle population: total amount of freight to be transported, share of that freight moved via highway and transport capacity and efficiency per vehicle.

“Demand for these commercial vehicles is expected to be near 800,000 units per year in the next five years,” Perkins said. He continued, “However, as efficiency and per-vehicle capacity improves, a fluctuating downward trend has started to emerge.”