Sales decline in turning point of construction machinery industry

"Falling like a free fall," an industry player described the market performance of China's construction machinery industry this year. Due to deceleration of investment in high-speed rail, real estate control and currency tightening, the sales volume of China's construction machinery industry declined sharply after the second quarter, and some companies have already taken measures to reduce production.

Recently, the 11th China (Beijing) International Engineering Machinery Building Materials Machinery and Mining Machinery Exhibition and Technology Exchange Conference was held in Beijing. Participating experts and scholars believe that the overall growth rate of the construction machinery industry has been an indisputable fact. It is expected that in the second half of the year, the sales volume of construction machinery will be difficult to reverse.

Did the inflection point really come and fall, starting from April.

After experiencing explosive growth in the first quarter, industry sales in April began to show a sharp decline from the previous month, and continued to decline from May to August. The rapid growth of the construction machinery industry in 2010 was reversed in April 2011.

Statistics show that in April, excavator sales fell after hitting a new monthly high in March, a 38.79% qoq drop; the loader decreased by 2.86% year-on-year, a decrease of 28.27% compared to the previous period; the bulldozer decreased by 1.2% year-on-year and decreased by 32.81% from the previous month. From April to August, the overall sales decline in the industry has continued.

September has always been the peak season for the sales of machinery. This year, there has been a phenomenon that “the peak season is not booming”. Except for the construction of railways, the growth effects of the construction of affordable housing and the construction of water conservancy projects in the construction industry on the sales volume of the construction machinery industry have not been reflected.

In view of the slowdown in the growth rate of the construction machinery industry, and in particular the drop in the sales of some leading products, the "turning point theory" has been on for a while. Some people in the industry said that the new turning point in the development of construction machinery has emerged, and the industry's previous high growth is difficult to reproduce. In the future, it may show a low growth trend and even decline in multiple months.

According to Jun Jun, president of the China Construction Machinery Industry Association, in general, sales of the construction machinery industry are divided between the off-season and the peak season, and the slight decline in sales in April is a normal seasonal fluctuation. However, the 30% decline in the entire industry in April 2011 was indeed rare. The reason is mainly due to the decline in market demand caused by the previous sales overdraft and the national macroeconomic regulation.

Since the beginning of this year, in order to regulate and control the macro economy, the state has issued a series of financial policies that have limited the credit lines of real estate and other industries. The impact of the credit crunch on the construction machinery industry is mainly reflected in two aspects: First, it affects the downstream demand of the industry, mainly due to the delay in the construction progress of some projects under construction, and the delay in the commencement of some of the originally planned projects; second, it affects the construction machinery. The company’s marketing efforts began in April. Some companies have strengthened risk control and actively reduced the proportion of credit sales. At present, the impact of credit tightening on sales of construction machinery cannot be quantified. It is expected that sales will be affected throughout the year.

Su Zimeng, secretary-general of China Construction Machinery Industry Association, explained that the financial crisis was approaching and that the Chinese construction machinery industry experienced unprecedented negative growth and fell to the bottom; after the implementation of the 4 trillion economic stimulus plan, a series of construction With the introduction of the project, the construction machinery industry was pushed back to the peak and blind investment emerged. As a result, the competition has intensified and the “Fortress Besieged” complex has appeared. Behind the “siege” in the construction machinery industry is the increasing reshuffling. Su Zimeng said: “Taking the excavator industry with huge domestic demand as an example, from the perspective of the expansion plans obtained by major companies, this year's excavator production capacity will be as high as 300,000 units, which will inevitably lead to excess capacity. problem". Excavator production capacity is enlarged, and future market competition will be more intense. If the growth rate of the industry is only 5% or less, there will be a “shopping” situation, foreign brands will also be entangled, and the situation will become more severe.

The outlook for the future is still optimistic. Despite the slowdown in the current growth of the construction machinery industry, there are still flashes of light from time to time.

The executive meeting of the State Council held on July 12 proposed to improve relevant policies and measures, increase government input and loan support, and ensure that 10 million sets of affordable housing will be started before the end of November. This means that before the end of the year, the nation's affordable housing construction is expected to usher in the peak period, which will directly drive the market demand for construction machinery, especially earthmoving machinery and concrete machinery.

Water conservancy construction will also be expected to become a new growth point for the construction machinery industry. In 2011, the No. 1 Central Document focused on water conservancy construction and proposed to increase public finance investment in water conservancy and strive to increase the average annual input of water conservancy in the society in the next 10 years compared with 2010. It is expected that the water conservancy investment is expected to accelerate implementation, and the water conservancy construction investment project will start on a large scale, and the construction machinery industry will benefit from it.

Su Zimeng, the secretary general of the China Construction Machinery Industry Association, estimated that sales will increase by 17% over the previous year. The next few years,

The industry outlook remains optimistic. By the end of the "Twelfth Five-Year Plan," China's construction machinery sales reached 900 billion yuan, an average annual increase of 17%.

However, some experts believe that with the continuation of austerity measures, the high-speed growth of the construction machinery industry is difficult to sustain. A brokerage researcher pointed out that the current industry has two positive benefits: the impact of affordable housing and water conservancy construction on sales of construction machinery industry is likely to be lower than expected.

In order to reverse the trend, the construction machinery industry has taken promoting independent innovation as a central link in transforming the development mode of the enterprise, giving full play to the leading role of science and technology, supporting the breakthrough of industrial core technologies and key technologies, developing high-end equipment manufacturing, and comprehensively enhancing the core competitiveness of enterprises. Complete the transition from a manufacturing power to a manufacturing power as soon as possible.

At the 11th China (Beijing) International Engineering Machinery Building Materials Machinery and Mining Machinery Exhibition, it can be seen that Xugong, Liugong, Shantui, and China United have brought new products to the exhibition, and Liugong has brought 35 models to the world. The products weigh heavily in the exhibition. XCMG has exhibited 32 sets of products and Sany Heavy Industry has brought 35 new products of its five categories to the show.

Many leading companies in the construction machinery industry, while deploying the domestic market, have acquired internationally-renowned construction machinery companies and R&D institutions, or promoted through overseas promotion in line with international standards, to enhance their own resource strength and accelerate the deployment of the international market. For example, Zoomlion’s acquisition of Italian CIFA and Sany Heavy Industry’s brand output, and Liugong's acquisition of 42% of Shougang’s Sinopec’s stake have become the highlights of the development of the construction machinery industry.