A glimpse into China National Heavy Duty Truck Group's Hong Kong stock performance and 2025 financial report: New energy heavy-duty truck sales increase significantly year-over-year, with a slight decline in overall gross profit margin.

Question to AI: Why is China National Heavy Duty Truck Group’s gross margin under pressure despite soaring sales?

Reporter: Peng Fei Editor: Huang Sheng

In the complex situation of global economic and trade order fluctuations and the deepening transition of old and new driving forces in the domestic market in 2025, China National Heavy Duty Truck Group (Hong Kong) Limited (hereinafter referred to as “China National Heavy Duty Truck,” 03808.HK) submitted its performance report for 2025 on March 27.

Against the backdrop of intensified competition and ongoing price wars in the domestic commercial vehicle industry, China National Heavy Duty Truck achieved operating revenue of 109.541 billion yuan in 2025, a year-on-year increase of 15.2%; the profit attributable to equity shareholders reached 7.019 billion yuan, a year-on-year growth of 19.8%, with basic earnings per share of 2.57 yuan, up 20.1% year-on-year.

Reporters from the Daily Economic News noted that under the wave of new energy transformation, the sales of electric heavy-duty trucks and light trucks from China National Heavy Duty Truck increased by 248.9% and approximately 220%, respectively. However, at the same time, both its overall gross margin and operational profit margin for heavy-duty trucks have declined.

Soaring Sales, Pressured Gross Margin

From the overall revenue perspective, China National Heavy Duty Truck fought a successful battle for scale in 2025.

During the reporting period, China National Heavy Duty Truck’s revenue reached 109.541 billion yuan, an increase of 14.479 billion yuan year-on-year. This significant rise in revenue was primarily due to strong growth of over 20% in sales of heavy-duty and light trucks. Among them, the heavy-duty truck segment achieved total revenue of 97.179 billion yuan, a year-on-year increase of 13.7%; the light truck and other segments achieved total revenue of 14.550 billion yuan, a year-on-year increase of 30.4%.

Financial report data show that China National Heavy Duty Truck’s gross profit reached 16.519 billion yuan, up 11.1% year-on-year. However, during the same period, the gross margin fell to 15.1%, a slight decrease of 0.5 percentage points. Regarding the decline in gross margin, China National Heavy Duty Truck admitted in its financial report that this was mainly due to changes in regional structure and model structure.

Further analyzing the core business, the heavy-duty truck segment, as the absolute mainstay of China National Heavy Duty Truck, is experiencing squeezed profit margins. In 2025, the heavy-duty truck sales of China National Heavy Duty Truck reached 292,100 units, a significant increase of 20.0% year-on-year. However, under the large sales base, the operational profit margin for the heavy-duty truck segment was only 8.3%, a decrease of 0.4 percentage points year-on-year. This is also attributed to the impact of changes in regional structure and model structure.

Reporters from the Daily Economic News noted that, at the root, the brutal competition in the domestic commercial vehicle market is an external driving force behind the current situation.

China National Heavy Duty Truck mentioned in its performance report that in 2025, the domestic commercial vehicle market entered a stage of stock competition, with continued pressure on the demand for traditional fuel vehicles, while the acceleration of the new energy transition led to an escalating price war, compressing profit margins. In addition, the pace and intensity of local “trade-in” policies varied, leading to uneven market demand release, while road rights policies continued to tilt toward new energy, further squeezing the market space for fuel commercial vehicles.

In response to the above market volatility risks, China National Heavy Duty Truck stated that in the complex market environment, the group actively responded, precisely analyzed the underlying logic of market differentiation and effectively grasped domestic policy dividends, achieving growth in sales and market share.

It is worth noting that on the expenditure side, China National Heavy Duty Truck’s selling and distribution costs have also risen. During the reporting period, distribution costs were 4.238 billion yuan, an increase of 23.2% year-on-year, and the proportion of distribution costs to product revenue also increased by 0.3 percentage points year-on-year to 3.9%.

This indicates that to maintain soaring sales amidst fierce price wars and a stagnant market, the company has incurred higher marketing costs.

Expansion of Overseas Markets, High Investment in R&D

In the face of fierce competition in the traditional fuel vehicle market, China National Heavy Duty Truck pins its hopes for breaking through on two major engines: “going overseas” and “new energy.”

In terms of international business, China National Heavy Duty Truck is experiencing strong growth. In 2025, the group exported 153,400 heavy-duty trucks (including joint venture exports), a year-on-year increase of 14.4%. Overseas revenue reached 44.347 billion yuan.

Information in China National Heavy Duty Truck’s performance report shows that its heavy-duty truck export volume and revenue have hit historical highs, maintaining the leading position in China’s heavy-duty truck exports for twenty-one consecutive years. In advantageous markets such as Africa and Southeast Asia, China National Heavy Duty Truck has stabilized its fundamentals; meanwhile, through measures such as accelerating subsidiary registration, operating parts center warehouses, and establishing local factories, it has achieved significant results in deepening markets and breaking through high-barrier markets.

Moreover, the export revenue of light trucks and other segments also reached 1.437 billion yuan, with a year-on-year increase of 76.3%, during which the export volume of light trucks and light vehicles grew by 161% and 64%, respectively.

In the new energy sector, China National Heavy Duty Truck has also encountered explosive growth. During the reporting period, the group’s sales of new energy heavy-duty trucks increased by 248.9% year-on-year, achieving a market share of 11.8%. Among them, the market share of new energy dump trucks increased by 5.8% year-on-year, ranking first in industry growth. The performance of the new energy sector in the light truck segment is equally impressive, with sales of new energy light trucks growing by approximately 220% year-on-year, far exceeding the industry average, and the market share of new energy fence trucks ranking second in the industry.

Reporters from the Daily Economic News noted that alongside the brilliance of going overseas and the surge in new energy sales, there are still shortcomings and differentiation in its business structure. Although the light truck and other segments achieved a high growth of 30.4% in revenue, selling 123,100 light trucks, this segment still failed to turn a profit, with an operating loss margin of 1.5% (though it improved by 0.4 percentage points compared to the same period last year).

In contrast, the smaller financial segment has become a “highland” for profit margins—during the reporting period, revenue from the financial segment was 744 million yuan, a year-on-year increase of 20.6%, while its operating profit margin reached as high as 25.7%, a significant increase of 5.9 percentage points year-on-year.

Furthermore, to maintain technological leadership and the pace of transformation, China National Heavy Duty Truck continues to invest heavily in R&D. During the reporting period, administrative expenses amounted to 5.124 billion yuan, of which research and development expenses accounted for 56.6%, an increase of 1.6 percentage points compared to the same period last year.

Faced with future uncertainties, China National Heavy Duty Truck still shows sincerity in returning benefits to shareholders. The board of directors proposed a final dividend of 0.88 Hong Kong dollars or 0.78 yuan per share for the year ending December 31, 2025, totaling approximately 2.43 billion Hong Kong dollars or 2.154 billion yuan.

In summary, China National Heavy Duty Truck’s billion-yuan revenue and record-breaking sales demonstrate its deep industry foundation and strong market development capabilities, but the continuous decline in gross margin also sounds the alarm for the price war’s impact on profits. In the future, how to maintain advantages in overseas markets and the rapid growth of new energy while effectively restoring the profit margins of traditional core businesses and quickly reversing losses in some business segments will be the key challenge for this commercial vehicle giant to achieve high-quality development.

Daily Economic News