In May 2006, during the Golden Week holiday, a group of elderly people gathered in front of the Shanxi Automobile Group on the western side of Sports Road in Taiyuan, Shanxi. They were discussing the recent developments: the first heavy-duty truck after the factory’s reorganization was not expected to roll off the line on May 1st as previously announced. What had gone wrong? Was it due to the lack of private investment from Huayu, which had poured in 3.5 billion yuan? And what exactly had happened with the restructuring of SAMSUNG?
These questions sparked curiosity among many in Shanxi. A year earlier, the largest company in Taiyuan, the Huayu Group, had announced its entry into the automobile manufacturing industry with a massive investment of 3.5 billion yuan, aiming to produce 20- to 35-ton heavy-duty trucks. This project was considered one of the key initiatives under Shanxi's "Eleventh Five-Year Plan" for industrial restructuring. However, the progress seemed slow, and the controversy continued.
One year ago, there was high expectation that Shanxi would meet the demand for 20,000 heavy trucks annually. But the reality fell short. Shanxi, known as a major coal transportation hub, already had over 200,000 heavy vehicles on the road, growing by 2–40,000 each year. In 2005, road transport accounted for about 65% of the total freight volume in the province. Despite this booming market, Shanxi's automobile industry lagged behind. Once-popular brands like Datong Yungang and Changzhi Huaihai had faded into obscurity, and the only local manufacturer capable of producing complete vehicles lacked competitive strength. From 1991 to the present, Shanxi produced fewer than 6,000 heavy-duty trucks, far behind giants like Jinan Heavy Duty Truck and Shaanxi Zhongqi.
In early April 2005, the Shanxi Provincial Government transferred control of the Shanxi Automotive Group to Taiyuan City, paving the way for Huayu’s acquisition of the state-owned Shanqi Company. With a planned annual output of 20,000 heavy trucks, Huayu aimed to capitalize on Shanxi’s strong demand. According to Huayu’s chairman, Zhao Huashan, Shanxi is the largest consumer market for heavy trucks in China, with 40% of national sales concentrated in the region. He believed that with the right strategy, Huayu could succeed even though it had no prior experience in the industry.
Huayu had already set up a technical center in Shanghai, assembling a team of over 40 automotive experts. The company partnered with well-known manufacturers such as Seven O Engine Research Institute and Double Happiness Tires. Their product range included low-end 15-ton trucks, mid-range 20-ton models, and high-end 35-ton trucks. Based on market research, they estimated an annual demand of around 100,000 heavy trucks, with at least 20,000 needed just in Shanxi. As the energy provinces of Shanxi, Shaanxi, and Inner Mongolia continue to develop, the demand for heavy trucks is expected to rise further.
Experts from Shanxi’s Electrical and Mechanical Department praised Huayu’s bold investment, noting that few companies in China have committed such a large sum to heavy truck production. Over the past decade, Huayu had grown from a supermarket chain into a diversified conglomerate involved in real estate, finance, and tourism. Its leadership was seen as agile and innovative.
The government also supported the project, including it in the “Eleventh Five-Year Plan†and granting Taiyuan City the authority to manage the project. A new 1,000-acre plant area was approved, along with favorable policies and environmental support. The restructuring of Huayu and Shanqi was seen as a strategic move to boost Shanxi’s auto industry.
Despite these efforts, the long-awaited launch of Huayu’s heavy trucks did not happen as scheduled. Some feared that the private enterprise might struggle to revitalize the struggling state-owned company. Meanwhile, the heavy truck market in China is highly competitive, with FAW, Second Automobile, and CNHTC dominating the 15–20 ton segment. Foreign brands like Mercedes-Benz and Volvo are also expanding their presence in the region.
Huayu, however, remains confident. It has developed 69 heavy truck models, with two prototypes launched in October 2005. Industry observers noted that the performance was promising, and the cost-effectiveness of the models offered a clear advantage. The company plans to focus on independent development and gradual expansion. With the completion of the joint engine project with Shanxi Diesel Engine Industry, Huayu is positioning itself for long-term success.
Industry optimists believe that if the restructuring succeeds, Shanxi’s heavy truck production could reach 40,000 units by 2008. Whether or not this vision becomes reality, the journey of Huayu and Shanxi’s auto industry is one worth watching.
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