【 Article/Observer Network Zhang Jiadong Editor/Observer Network Gao Xin 】

On March 11th, Volkswagen Group's truck business unit, TRATON GROUP, officially showcased its future development strategy to Chinese partners and media - the development prospects of the electrification market based on the commercial vehicle market, and a comprehensive shift towards a win-win development model with China at the strategic level.

According to official information, Chuantuo Group owns four brands: Scania, MAN Truck&Bus, International, and Volkswagen Truck&Bus. Its main sales markets are Europe, the United States, and South America.

Chuantuo stated that in the future, the group will replicate Scania's modular technology on three other brands and fully integrate the research and development of its four brands to establish the Chuantuo Modular System (TMS).

The premise of its integration is derived from Chuantuo's thirst for a broader market in the commercial vehicle field.

According to the official website of Tuo, the group's 2024 annual performance shows that it continued the overall sales performance of the previous year, achieving a total of 334000 new car sales, a slight decrease of 1% year-on-year.

Among them, as the Scania brand with the highest sales proportion, it is leading the key to expanding the market for Chuantuo.

According to Rutherger de Vries, President of Industrial Operations for Scania Asia, this truck brand with over 130 years of history worldwide is currently facing a new choice in the global market, and China is the top priority for Scania and the entire Transsion Group's future development.

Before building the Chinese factory, Scania had two factories worldwide. One was the European production and operation center built around the Swedish research and development center established in 1891, and the other was a replica factory of the European production base built in Brazil in 1967.

However, the annual production capacity of the two factories is only 100000 vehicles, based solely on last year's sales of 102000 vehicles for the Scania brand. These historic factories are no longer able to meet the growing demand in the market.

Rutherger said that the current truck market is constantly growing based on the increase in transportation demand, and this trend is particularly evident in China.

Chuantuo China Office General Representative He Mochi Observer Network

Mats Harborn, the general representative of Chuantuo China Office, added, "The development of the automotive industry has been very stable for a hundred years, but now the entire industry is changing rapidly, and the group also needs to prepare more resources when facing digitization and electrification

So, Scania has been building a brand new factory in Rugao, Jiangsu since 2020, with a set annual production capacity of 50000 vehicles. In 2023, the company broke ground on the second phase project in Rugao and added the production of powertrain on the basis of the whole vehicle project.

When explaining the reasons for investing heavily in China, Rutherger said, "Firstly, the size of the Chinese truck market is the sum of the European and American markets, which meets Scania's needs to expand its market; secondly, China's automotive technology is developing the fastest, which can ensure Scania's competitiveness in the market; thirdly, through the sole proprietorship factory construction method, Scania can have full control over the core processes, thereby better communicating with suppliers

He Mochi stated that while localizing, it will also integrate into the local supply chain and innovation ecosystem. Under this premise, Scania hopes that in the future, the localization rate of its components for car models produced in China can reach 85%, and through the research and development system built in China, it can maintain the same level as global products in Europe and Brazil.

In addition, after the completion of the Chinese factory, Scania also plans to transfer the production capacity demand from Europe to Asia.

Sonia Ederst å l, Head of Research and Development at Scania Asia

Sonia Ederst å l, the head of R&D at Scania Asia, also outlined the latest R&D system of the group. The R&D centers are located in Beijing, Shanghai, and Rugao, China, covering innovative R&D, software and vehicle networking development, and testing. In the future, the research solutions in China will be integrated into global system solutions.

However, just like the pressure that overseas passenger cars are currently facing in the Chinese market, European commercial vehicles entering the Chinese market also face enormous challenges. However, what is presented to Chuantuo is a multiple-choice question with the only answer.

According to the latest financial report, last year, Chuantuo's sales revenue reached 47.5 billion euros (approximately 374.44 billion yuan), a year-on-year increase of 1%; The adjusted operating sales return rate is 9.2%, an increase of 0.6 percentage points compared to the previous year.

Morgan Stanley analysts stated in a report that the adjusted return on operating sales is the main profit indicator for Transsion, and the increase in this data is mainly attributed to the efficiency improvement measures taken by the company.

However, in the eyes of the capital market, Chuantuo's efficiency gains last year still face huge challenges in the face of the international trade situation.

Analysts say that currently, with the global economic downturn, they are cautious about the sales prospects of the commercial vehicle market in 2025, which directly affects and leads to a series of truck manufacturers such as Transsion's stock price decline on March 10th.

More importantly, currently 65% of the trucks supplied by Transsion to the United States are assembled at its Mexico factory. After the United States imposed a 25% tariff on Mexico this month, although Transsion stated that the tariff would not have a significant impact on Mexican imports in the short term, the capital market still reacted conservatively to Transsion's prospects.

Chuantuo Future Product Planning Observer Network

According to the latest sales data released by the China Association of Automobile Manufacturers, the sales of commercial vehicles in China totaled 458000 units in January and February this year, a year-on-year increase of 4.5%. Among them, the demand for trucks is rapidly increasing.

On the one hand, this confirms the speculation of Chuantuo, but on the other hand, it also reflects that the competition in the Chinese commercial vehicle market will continue to intensify.

Regarding this, Chuantuo stated that in the future, it will leverage the technological potential of the Chinese R&D center to form an innovative model of "China Europe dual core R&D+regional manufacturing".

In addition, Chuantuo is also facing the same dilemma as Volkswagen Group's passenger cars in the Chinese market, namely the pressure of electrification transformation.

Sales of various brands of Chuantuo Group in 2024 Chuantuo Group official website

In February of this year, the proportion of sales of new energy commercial vehicles in China has reached 17.2% and is showing a slow upward trend, which also means that the competition in the Chinese commercial vehicle market will shift towards the new energy field in the future. Compared to the previous year, the penetration rate of new energy vehicles in Chuantuo was only 0.5%, and even decreased by 0.1 percentage points. This means that Chuantuo is currently facing the challenge of electrification transformation in the field of new energy.

In addition to competition in the Chinese market, Transsion will face the pressure of European electric transformation together with Volkswagen Group. Reuters mentioned in a recent report that the decline in sales of Transsion's electrified models is increasing the risk of failing to achieve European carbon emission targets.