Commercial vehicle manufacturer counts on govt

A government purchase order has shed light on the struggles commercial vehicle makers are having in the sluggish market. Beiqi Foton Motor Co, the largest commercial vehicle manufacturer in China in terms of sales volume, has found another channel for its vehicles — government missions that requires heavy-duty trucks or buses.

On July 5, Foton signed an agreement with Fei Cheung Logistics to cooperate on government missions transporting space equipment. Last month, Foton heavy-duty trucks were selected to transport equipment for the spacecraft Shenzhou X to its launching site and successfully completed that mission.

It is not the first time Foton has been awarded government contracts. The Beijing-based commercial vehicle manufacturer has also secured an order for 3,012 buses from the Beijing transportation group, to be delivered in two years.

Each bus has a sticker price of 1.2 million yuan ($195,600) to 1.3 million yuan. The order means Foton has already accounted for 1.57 to 1.72 billion yuan in revenue next year, around 4 percent of its total revenue in 2012.

As the only major commercial vehicle manufacturer in Beijing, it is highly possible government orders will keep coming to Foton, as the city develops its public transportation and green-vehicle technologies, analysts say.

A report from China Galaxy Securities said government orders of new-energy vehicles and the rebound of the truck industry will be two major drive forces for Foton this year.

Last year, the commercial vehicle industry was hit hard by the bad economy but this year the industry is showing a slow recovery. Foton, for instance, sold 53,885 heavy-duty trucks from January to May, up by 29 percent year-on-year, and the accumulated sales of buses in the same period rose by 43 percent to 12,492.