China’s LNG heavy truck sales rose by 58% QOQ in Q1, 2025, bucking the trend of the overall heavy truck industry. Looking ahead to Q2, LNG heavy truck sales are expected to maintain steady growth, boosted by policy and the traditional peak season for logistics. However, due to expectations of a narrower price spread between oil and gas, the growth is anticipated to narrow slightly.

The LNG heavy truck market remained robust in Q1. According to SCI, China’s LNG heavy truck sales totaled 47,008 units in Q1, 2025, up 17,217 units or 57.8% compared to Q4, 2024, and increased by 1,721 units or 3.8% compared to Q1, 2024. In January, the sales reached 7,676 units, up 20.5% YOY, marking a five-year high for the same period. In February, despite a temporary dip in demand due to China’s New Year holiday, sales surged to 17,700 units, up 84.53% YOY, driven by widened oil-gas price spread and cold weather boosting heating demand. In March, sales fell to 21,632 units, down 26.23% YOY but up 22.21% MOM. This decline was attributed to sluggish freight rates and a record-high base of nearly 30,000 units in March 2024.

Policy incentives and regional economic disparities caused differences among regions in the development of LNG heavy trucks. North China, Northwest China and East China contributed nearly 60% of LNG heavy truck sales. North China led with 15,704 units, accounting for 33.41% of total sales. This dominance was attributed to strong coal transportation demand in the Beijing-Tianji-Hebei region and Shandong-Shanxi area, alongside local policies favoring the replacement of diesel trucks. Northwest China followed with 9,638 units (20.5% of total sales), taking cues from the high price spread between diesel and LNG as well as higher LNG truck penetration rates. East China ranked third with 7,326 units (15.58% of total sales), driven by rebounding demand from port logistics and manufacturing sectors.

In Q1, 2025, the price spread between diesel and LNG stood at RMB 2,663.29/mt, expanding by 13.01% YOY but narrowing by 7.91% YOY. On one hand, international crude oil prices rose due to geopolitical conflicts and tight diesel supply, while domestic LNG prices weakened amid abundant supply and subdued demand during China’s New Year holiday. On the other hand, in Q1, 2024, low global spot costs weighed on LNG prices, resulting in a narrower price spread.

Policy dividends will likely drive replacement demand. On March 18, 2025, the government issued the Notice on the Scrappage and Renewal of Old Operational Vehicles. This expanded subsidy coverage to National IV emission standard vehicles for the first time and included natural gas-powered models in the subsidy system. This further bolstered the robust LNG heavy truck market. As policies gradually touch down in Q2, the market is expected to enter a policy realization phase, with some users who hesitated in Q1 likely opting for replacement in Q2.

Peak logistics demand season will probably boost sales. On one hand, Q2 is a traditional peak season for logistics demand. With PMI likely remaining in expansionary territory, demand for coal, building materials and other commodities will likely drive new vehicle purchases. Additionally, rising operating rates for infrastructure projects are expected to spur demand for engineering-oriented LNG heavy trucks. On the other hand, a surge in coal stockpiling demand ahead of summer will further elevate LNG heavy truck penetration in resource-rich provinces in North China and Northwest China.

LNG economics will persist but may narrow. Diesel prices may rise in Q2 due to reduced supply and increased demand. However, volatile crude oil prices may hamper the upward momentum of diesel. LNG prices may trend up in Q2, following scheduled maintenance of inland liquefaction plants and rising cooling demand from southern regions. Coupled with policy incentives and market inertia, sales of LNG heavy trucks are forecast to grow modestly.

In Q2, the sales are projected at 65,000-70,000 units, up 38%-49% QOQ, supported by policy, peak logistics demand and LNG economics. In 2025, driven by sustained policy dividends and energy transition trends, the LNG heavy truck market is poised for structural growth, and sales may reach 230,000 units, translating to about 22.2 MMt of LNG demand. Over the next five years, LNG heavy trucks will continue to replace diesel trucks due to environmental policy, cost advantage and technological upgrades.