Excavator market overcapacity, surging market competition surging

China Construction Machinery Industry Association statistics show that in 2011, China's excavator sales will reach more than 160,000 units, an increase of about 60%. The market demand for excavators is closely related to the country's fixed asset investment. Undeniably, with the acceleration of the pace of urbanization in China and the acceleration of the development process in the west and the west, the excavator industry will still have better market potential during the “Twelfth Five-Year Plan” period, but the risks will often go along with the opportunities and are expected to be good in the market. Under the surface, the excavator industry may have a hidden trap of excess production.

At present, besides Doosan Heavy Industry, Caterpillar, Hitachi Construction Machinery, Kobelco, Volvo and other overseas investors, there are production of XGMA, Sany Heavy Machinery, Liugong, XCMG, Zoomlion, and Shandong Lingong. excavator. According to industry estimates, by 2014, China's domestic excavator production capacity will reach 425,000 units. Taking into account the non-negligible market capacity brought by imported products, the issue of overcapacity in the domestic excavator market will be prominent. In the first quarter of this year, domestic excavators sold a total of 74.214 million units, a year-on-year increase of 59%. In March alone, 24 excavator manufacturers sold about 43,000 units. However, a senior executive of Zoomlion once told the media that the domestic excavator production capacity has exceeded 300,000 units in the first quarter of this year. Last year, the sales volume of excavators in China was about 160,000 units, which means that this year it is not in any company. Under the premise of expanding production capacity, it is only possible to double the sales volume before digesting these surplus products.

Industry insiders believe that it is unlikely that the excavator market will achieve sales of 300,000 units this year. According to the forecasts of the excavator branch of the China Construction Machinery Association, the total sales volume of excavators this year is about 190,000 units, between 2012 and 2014 between 218,500 units and 302,000 units. Based on the data predicted by the China Construction Machinery Industry Association that the industry's sales in 2015 could reach 900 billion yuan, a simple calculation will be made. Excluding factors such as inflation, price increase, and product upgrades, it is expected that the excavator sales in China will increase in 2015. About 360,000 units, which in itself is a questionable number. Nowadays, the tightness of the excavator market is attracting the continued enthusiasm of most companies for this project. This is evident from the plan for investment expansion of excavator projects in the next few years.

Among the local brands, Sany plans to produce and sell 25,000 excavators in 2011; Xugong’s excavator sales target in 2011 will reach 10,000; Liugong’s goal is to reach 30,000 units by 2015 According to the company's development strategy plan, XGMA plans to implement an annual investment of 12,000 excavator investment projects; Guangxi Yuchai and Sichuan Bangli will invest in large and medium-sized excavators in Quzhou, with a total scale of RMB 2 billion. An annual production capacity of 5000 large and medium-sized excavators will be formed.

In the second and third-tier brands, the investment of each brand is also important. Rongsheng Heavy Industry invested RMB 3.4 billion in Anhui to build a project with a production capacity of 30,000 excavators and 400 rotary drilling rigs; Wushiye Group’s affiliate Pushi Heavy Machinery has also invested more than RMB 400 million to produce medium and small excavators. After the project is fully put into production, the annual production capacity will reach 10,000 units....... For China's excavator manufacturers, only when they are truly cautious, fully study the market, and enhance their core competitiveness, will they smile and go to the other side when the tide recedes.

“Overcapacity in the future will be even more serious.” The aforementioned Zoomlion senior executive pointed out that there are currently a total of 12 companies in mid-to-long-term planning, such as Caterpillar completed the expansion of Jiangsu Wujiang and Xuzhou bases. The production capacity will reach 34,000 units; Sany Heavy Machinery will have 80,000 mid- and long-term plans, and Rongsheng Heavy Industries & Construction, which invests in shipbuilding, is also expected to build 30,000 hydraulic excavator production bases in the next few years. Chen Peiliang told reporters that the reason why the excavator industry was generally optimistic, based on the following aspects: As 4 trillion yuan of investment projects have been launched one after another, whether it is construction sites or manufacturing companies, airports, railways, etc. have demand for excavators Many manufacturers and distributors use various promotion methods. Buyers can use their own products on their own. They can also lease excavators to third parties and repay them with rent. Excavators, unlike pumping machinery, have relatively high selling prices. It's cheap to say, less than 1 million yuan to buy a few, and the pumping machine sells for as much as a few million dollars; the key components of the excavator such as castings, speed reducers, etc. are also expanding, so state-owned mining Machine companies can quickly mass production to meet market demand.

"In the short term, the production capacity of excavators may be passively reduced due to the impact of the earthquake in Japan." A fund company researcher told reporters that the current supply situation of hydraulic parts companies such as KYB and Kawasaki Heavy Industries is not stable, and their own accessories are also There is a shortage, so the capacity expansion of excavators in China will slow down in recent months. However, many companies have invested a lot of manpower and material resources, so they will not easily give up this part of the market. The aforementioned senior executives of Zoomlion also pointed out that the excavator market will face an overall price war and a sharp drop in profitability. “This situation occurred five years ago in the loader market. At that time, there were 50 companies in the country with a production capacity of 300,000 units per year, but the demand was only about 100,000 units per year, resulting in some enterprises having only 300,000 yuan worth of products left. Less than 10,000 yuan in profits."