Heavy-Duty Engine Sales Slide as Weichai Power’s Supplier Payables Near RMB 100 Billion

On August 30, one day before its annual report deadline, Weichai Power released its interim results for the first half of 2025, revealing a 4.4 percent drop in net profit attributable to shareholders. Since Tan Xuguang’s departure roughly a year ago, new chairman Ma Changhai has confronted a contracting natural-gas heavy-truck market and diminishing share for the company’s gas-powered engines. Despite record-high accounts payable and notes payable, operating cash flow lags behind the levels seen in 2023 and 2024, raising questions about Weichai Power’s ability to sustain the momentum it achieved under its former leadership.

Revenue for the period rose marginally by 0.59 percent to RMB 113.152 billion, while net profit fell to RMB 5.643 billion. The company’s largest business segment—powertrains, complete vehicles, and key components—delivered RMB 47.932 billion in revenue, up 2.67 percent year-on-year. Within that segment, heavy-duty truck engines remain the cornerstone product: the domestic heavy-truck market expanded by 6.9 percent to 539,000 units, yet Weichai Power’s engine shipments declined by 9.5 percent to 362,000 units. In contrast, subsidiary Shaanxi Heavy Duty Automobile increased its vehicle deliveries by 14.6 percent to 73,000 units, helping to drive overall segment growth despite the engine shortfall.

A higher proportion of complete-vehicle sales and operational efficiencies improved segment gross margin by 0.87 percentage points, lifting the group’s overall gross margin by 0.43 percentage points. However, management expenses surged by RMB 1.686 billion to RMB 6.781 billion, largely reflecting RMB 1.51 billion in severance costs from workforce reductions at the KION subsidiary and amortization of equity-incentive expenses granted in 2023. Excluding these one-off items, adjusted net profit would have increased to RMB 6.65 billion. Weichai Power has not commented on the size or rationale for the layoffs at KION despite inquiries.

While overall engine volumes contracted by 9.5 percent, heavy-duty engine sales plunged by 22.4 percent to 125,000 units. This decline parallels a 16 percent drop in natural-gas heavy-truck sales to 91,500 units, driven by low diesel prices and a surge in electric heavy-truck adoption. By contrast, new-energy heavy-truck deliveries soared 186 percent to 79,000 units, eroding demand for gas-fueled models. Once commanding more than 70 percent of the natural-gas engine market, Weichai Power’s share fell to 51.85 percent in the first half of 2025—down from 60 percent at the end of 2024 and well below its peak—underscoring competitive pressures in the segment.

Despite the downturn in engine sales, Weichai Power’s operating cash flow remained robust, generating a net inflow of RMB 6.838 billion in the first half and exceeding RMB 60 billion cumulatively since 2023. This strength reflects cumulative profits of over RMB 26 billion during that period and an increased reliance on supplier financing: accounts payable and notes payable rose from RMB 67.58 billion at the end of 2022 to RMB 98.16 billion by June 30, 2025—an increase of more than RMB 30 billion. Although regulations now require large enterprises to settle payments to small and medium-sized suppliers within 60 days, Weichai Power’s payables remain near record highs.

To supplement its working-capital needs, the company has raised a total of RMB 48.452 billion since listing, of which RMB 31.852 billion came from bank borrowings. As of June 30, 2025, interest-bearing debt (excluding leases) stood at RMB 41.3 billion, generating RMB 1.852 billion of interest expense in the first half and implying an average borrowing cost approaching 9 percent. Meanwhile, cash and cash equivalents totaled RMB 68.32 billion, with marketable financial assets of RMB 14.73 billion. Despite these ample reserves, the company issued an additional RMB 13 billion via a private placement and plans to invest up to RMB 4.5 billion of the proceeds in wealth-management products—yielding roughly 5 percent, below its borrowing cost. A significant portion of its cash—RMB 33.593 billion—remains in bank deposits, while RMB 25.107 billion is held at an affiliate financial company, Shandong Heavy Industry Group Finance Co., Ltd.

With its historic founder retired and the heavy-truck engine business under siege, Weichai Power now faces the dual challenge of defending market share in traditional segments while accelerating its transition to new-energy powertrains. Under Ma Changhai’s leadership, the company’s strategic response to intensifying competition and evolving energy trends will determine whether it can sustain growth and maintain its industry‐leading position.