Shenwan Hongyuan Group Co., Ltd. has released a research report highlighting that both railway passenger volume and fixed asset investment have reached new peaks, alongside the launch of the second batch of high-level EMU maintenance tenders for 2026.

The substantial vehicle fleet size provides a solid foundation for aftermarket growth. Taking EMUs as an example, based on their designed service life, Harmony EMUs are expected to enter a replacement cycle starting in 2027, with a significant number of trains requiring major overhauls for life extension or complete replacement. The firm maintains a positive outlook on railway vehicle manufacturers and their core suppliers.

Key Insights from the Report

According to data from China State Railway Group, national railway fixed asset investment reached RMB 440.6 billion in the January-July period, up 1.8% year-on-year, while passenger volume hit 2.8 billion trips, a 4.1% increase. The national railway procurement platform shows that the second batch of 2026 high-level EMU maintenance tenders has been initiated, covering 138 trains (161.125 sets) for third-level maintenance, 89 trains (105 sets) for fourth-level maintenance, and 143 trains (155 sets) for fifth-level maintenance.

Record-Breaking Passenger Volume and Investment

On the passenger front, cumulative railway passenger volume reached 2.8 billion trips from January to July, up 4.1% year-on-year, with an average of 11,462 passenger trains operating daily, an increase of 571 trains or 5.2% compared to the same period last year. In terms of fixed asset investment, the total reached RMB 440.6 billion during the seven-month period, representing 1.8% growth year-on-year.

Second Batch of 2026 High-Level Maintenance Tenders Launched

The current tender round covers 138 trains (161.125 sets) for third-level maintenance, 89 trains (105 sets) for fourth-level maintenance, and 143 trains (155 sets) for fifth-level maintenance. Combined with the first-half tenders, the full-year 2026 procurement for third, fourth, and fifth-level maintenance totals 297 trains (346.5 sets), 168 trains (208 sets), and 216 trains (233 sets) respectively, reaching an aggregate of 681 trains (787.5 sets).

Growing Fleet Size Drives Aftermarket Maintenance and Replacement Demand

According to the 2025 Railway Statistical Bulletin, the national railway locomotive fleet stands at 22,700 units, comprising 7,900 diesel locomotives and 14,700 electric locomotives. Passenger car inventory totals 83,000 units, including 5,230 standard EMU sets (41,836 vehicles), while freight car inventory reaches 1.024 million units. This vast vehicle base underpins aftermarket growth prospects. For EMUs specifically, based on design life estimates, Harmony EMUs will begin entering replacement cycles from 2027, with numerous trains requiring major refurbishment for life extension or full replacement.

Key Companies to Watch

Focus areas include CRRC Corporation Limited (complete vehicles and core components), Zhuzhou CRRC Times Electric Co., Ltd. (traction systems), Beijing Thinkworx Technology Co., Ltd. (train control and monitoring systems), China Railway Signal & Communication Corporation Limited (train control and communication signal systems), Zhuzhou Times New Material Technology Co., Ltd. (vibration and noise reduction components), Kangni Mechanical & Electrical Co., Ltd. (doors), KTK Group Co., Ltd. (interiors), Bosun Co., Ltd. (wheelsets), Jinxi Axle Co., Ltd. (axles and car bodies), China Railway Construction Heavy Industry Corporation Limited (shield tunneling machines), and China Railway Hi-Tech Industry Corporation Limited (shield tunneling machines).

Risk Factors

Potential risks include macroeconomic and policy uncertainties, as well as the possibility of railway investment falling short of expectations.