The main profit sources of Beiqi Foton Motor are light and heavy trucks, which have contributed 88% of the company’s total profits; and the company’s new product – Foton-Cummins will be put online in May 2009 and Foton-Daimler joint-venture will be established in the second half of 2009; meanwhile hybrid bus will gradually be used in many cities in China. Therefore, the company’s future profit structure will change. Hybrid coach and Foton-Cummins Engine will be the new drivers for the company’s profit growth; thus hybrid coach, Foton-Cummins engine, light truck, and heavy truck joint venture will be the main source of profits in the future.
Beiqi Foton is a leading carmaker in the Chinese light truck industry, they account for 28% of the total market share, far higher than the other competitors. The main products include AUMARk, OLLIN, FORLAND series and SUP; AUMARK and OLLIN are the high-end products, the high-end light truck products accounts for 10% and middle and low-end products are the major FORLAND series, accounting for 85%.
From 1 March to 31 December 2009, the Chinese central government will invest 5 billion yuan to encourage farmers to scrap their three-wheeled motor vehicles and low-speed trucks when they buy new light trucks or under 1.3 liters micro-vans, the government will give financial subsidies. According to the market share of light truck manufacturers, the Foton’s light truck is in the mid and low-end light truck market, therefore, this company will be the biggest beneficiary in the Chinese light truck industry from this policy.
The company’s heavy truck products-AUMAN ranks fifth position in China’s heavy truck market currently. During Jan-Nov 2008, Foton’s heavy truck sold out 55,000 (the current capacity of 80,000 / year), occupied 10.7% the market share, the total income and profit of the heavy truck has exceeded light truck in the first half of 2008; but, at the same period, the sales of medium trucks was 2502, a drop of 55 per cent year-on-year, occupied 1.3% market share.
In March 2008, Foton and Cummins set up a joint venture BFCEC, each side holds equal equity. BFCFC is Cummins only light-duty diesel engine production base set up overseas and Foton will have its first light truck engines production line.
1 Brief of Foton
2 Analysis of profitability
3 Light truck
4 Heavy truck
5 Hybrid coach
6 Foton-Cummins light truck engine
7 Analysis of risk