Analysis of High-class Bus Market (over RMB900, 000 Yuan for unit price) in Jan.-Apr.,2010 Ⅲ

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It turns on big growth in the high-end bus market (valuing over ￥900，000 Yuan for unit) in Jan.-Apr.,2010 and the growth volume exceeds the market level in 2008.

Analysis of Growth Reason of High-end Buses in the first 4 months, 2010

1. The growth speed of bus market is obvious with the basic elimination of financial crisis and the national increasingly steady development in economy. The operators’confidence is recovering, who intend to purchase high-end buses. According to the data from national related department that the year-on-year growth of our GDP has exceeded 12% in Jan.-Apr.,2010.

Eight points is as followed:

a. Agricultural production is overall steady;

b. Industrial production fast picks up;

c. Investment in the fixed assets increases fast, especially in real estate and market sales;

d. Hot consumer products rapidly grows;

e. Consumer prices of households go up;

f. Foreign trade recovery speeds up and unfavorable balance of trade shows in the first four months ;

g. Income of urban and rural residents continuously increases;

h. The growth speed of money supply drags down from the high and year-on-year credit expansion reduces.

Shown that the improvement of the macroeconomic environment lays a solid foundation for the quick recovery of the bus market.

 2. The fast recovery of the bus market shows not only in year-on-year but also in structure change, in particular, the growth of the large-sized buses offers support to the high-end bus market.

Table 6: The comparison table of the proportion of various sales segmentation sectors of buses in Jan.-Apr., 2010

According to the structure change of the bus market, three obvious characteristics shows:

(A). In the first four months, the year-on-year sales growth is 83.30% for large-sized buses, 62.02% for medium-sized buses and 49.23% for light buses. The growth rate of large-sized buses is 21.28 percentage higher than that of medium-sized buses, 34.07 percentage higher than that of light buses. Big change happens to the structure of bus market. The proportion of large-sized buses goes up to 33.32% from 29.84% in 2009. Based on the market feedback, the bus builders have to make choice due to adequate orders and limited production capacity and take large-sized buses with more added value as the top choice.

(B) Seat buses and city buses

In the general growth range of 64.17%, seat buses account from 70.20%, sleeper buses take 81.54% and city buses only 50.87%. These all offers great support to the growth of the high-class buses in the first four months in 2010.

(C) Attacked by the financial crisis in 2009, the negative growth of the bus market comes to 35% and of high-end buses reaches 32% in the first four months 2010. The plummeting sales base facilitates the increasing in Jan.-Apr.

(D) High-end bus builders have well prepared , adopt their sbsgood points and avoid their shortcomings to open top luxury bus market. Meanwhile, they have made some achievements.

Analysis of the limited sales volume of high-end bus market

1. The emission standard is transferred from National Ⅱ to Ⅲ and many passenger transport companies purchased buses in advance, which affects the normal purchasing of buses in 2010. The proportion of new buses for them is high so that the purchasing volume of buses is decreasing, in particular, the high-class bus.

2. The conflict of surplus transport power of highway passenger transport market still exists. Currently, this situation is pervasive in high-class highway passenger transport market. Based on the research, the no-load rate is about 50%, over 60% for the long-distance passenger transportation with load distance of more than 300 kilometers. The government issues policies to main order of passenger transport market against cutthroat competition and the individual purchaser reduced than before. The influence is obvious for the high-class bus over￥900,000 Yuan.

3. The various transportation means makes the competition fiercer. The profit of the high-class bus market is falling. Customers pay more attention to price due to the impact of automobile consumer credit policy. Some bus builders adopt low price to attract customers, however, such action break the competitive order of the bus industry.

4. Because of the implementation of fuel duty and the rising of the oil price, the cost of passenger transport increases. The operation cost and risk of bus builders grows, making adverse effect on high-class bus market. The negative impact on high-class buses is a little smaller than medium or low class bus.

5. In 2010, the appropriately tight capital policy is adopted by bank. The threshold and qualification for the loaning of the passenger transport corporations is higher and higher. Therefore, the issue of the financing channels also affects the sales of high-class buses.

6. The increasing of electricity multiple unit (EMU) and the opening of high speed railway make the sharp cutoff of the passengers on high-end passenger transport routes, which force potential customers to change investment direction.

7. The high risk for the operation s the main reason for the limited market demand for high-class buses.

(a). The investment cost of operation on routes increases. The cost on the hot travel route is higher than that on vehicles.

(b). The useless period of operation vehicles is shorten by the national regulation. The rising of use-cost, labor cost and the reducing of customers’ rate of return lead to less profit of passenger transport companies.

 8. The purchasers of high-class buses are more cautious and powerful in bargaining because of relatively superfluous products and weak market demand.