Archion bets on service network to counter Chinese truck rivals in Asia

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Archion counters Chinese truck rivals

Highlights

Archion leverages its 3,700 global sales and service locations to maintain customer loyalty as Chinese truck rivals expand exports in Asia.
Chinese truckmakers' share of south-east Asia's regional truck market surged to 39 percent in 2023, eroding Japan's share from 68 percent to just over half.
Archion targets a near 30 percent increase in truck sales to 280,000 units and revenue of 2.8 trillion yen by 2032, focusing on shared platforms despite sales dropping 40 percent since 2018.

Service reach underpins competitive strategy

As reported by the Financial Times, Archion chief executive Karl Deppen says the heavy truck market differs from the passenger car segment because buyers place far greater weight on dependable servicing, repairs and parts availability. He says that focus gives established manufacturers with broad dealer coverage an advantage over newer Chinese brands, particularly in developing Asian markets where uptime is critical for commercial operators.

Deppen points to Archion's 3,700 global sales and service locations as a key asset. He argues that known brands benefit from customer confidence that spare parts are available and support is ready, while unknown entrants must still prove they can provide the same level of aftersales backing.

The importance of service quality becomes more visible after severe flooding in Thailand in September. Toyota moved quickly to offer repairs and parts discounts through its local dealer network, while Chinese EV maker BYD responded more slowly, highlighting how support capabilities can shape customer perceptions after disruptions.

Bernstein analysts said last month that Toyota's long investment in dealerships, service networks, spare-parts logistics, financing and customer relationships remains a significant competitive moat. That advantage is now central to Archion's pitch as Chinese truckmakers push deeper into overseas markets with cheaper diesel and electric models.

Chinese export growth tests Japan's market position

Chinese truckmakers have quadrupled exports of vehicles heavier than six tonnes to nearly 420,000 units since 2021, according to UK-based forecaster KGP. After large volumes went to Russia following the 2022 invasion of Ukraine and the resulting parts shortages at local producers, tighter trade measures in Moscow have pushed Chinese companies to intensify their sales drive in Africa, south-east Asia, the Middle East and Europe.

That expansion is already affecting south-east Asia, where Japan has long led truck sales. Data from Mobility Global show Japan's share of regional truck sales falls from 68 per cent in 2023 to a little over half last year, while China's share jumps to 39 per cent. Chinese trucks are gaining appeal because of lower prices and improving quality, with especially strong progress in Indonesia's mining sector, where charging and servicing can be managed more easily.

Toyota and Daimler Truck combined Hino Motors and Mitsubishi Fuso Truck and Bus in April to form Archion, with each parent holding a 25 per cent stake. The group plans to raise truck sales and revenue by almost 30 per cent to 280,000 units and 2.8 trillion yen by 2032, while lifting profitability by building 85 per cent of its trucks on shared platforms that use common parts.

Even so, Archion faces pressure after combined sales slump 40 per cent from a 2018 peak of 367,000 units, partly because of Hino's engine certification scandal and rising Chinese competition. Deppen says market development is likely to move at different speeds outside China, with hydrogen and biofuel among the alternatives Archion is pursuing as many buyers remain unconvinced about electric trucks.

Goldman Sachs analyst Kota Yuzawa says truck electrification is unlikely to advance as quickly outside China because battery-powered models sacrifice as much as 10 per cent of carrying capacity compared with diesel. He agrees that Archion's dealership network is very hard to replicate and creates a barrier to entry in south-east Asia, but says protecting market share still remains a difficult task.

In our earlier article on BYD Malaysia’s local assembly plans, we covered the company’s move to appoint Inokom Corporation as its CKD assembly partner in Kulim, Kedah. We noted that this followed BYD’s decision not to proceed with a Tanjung Malim plant and highlighted how local production capabilities can support BYD’s longer-term push in the Malaysian market, even as key details on models and timelines were still pending.

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