Construction Machinery Market: Excessive overcapacity hidden behind hot

In recent years, China's construction machinery industry has developed rapidly. In the eight years since 2002, the sales scale of China's construction machinery industry has increased nearly fourfold - from 77.3 billion yuan in 2002 to 310 billion yuan in 2009, with an average annual growth of approximately 24.4%. Among the several major categories of construction machinery products, China’s loader production and sales volume ranks first in the world. In 2009, the production and sales volume of 150,000 sets accounted for about 75% of the world; wheeled cranes also used 27,000 sets. Production and sales accounted for 75% of the world market; excavators accounted for 44% of the world market with 95,000 units; and forklifts also ranked first in the world with 130,000 units.

Affected by the lagging investment of 4 trillion yuan, in the first half of 2010, a large number of projects entered the construction phase, setting off an upsurge in sales of construction machinery. According to statistics, in April, the sales of excavators, truck cranes, loaders, and bulldozers were 21,853 sets, 4,169 sets, 29,530 sets, and 1,599 sets respectively, an increase of 103%, 41%, 83%, and 99% year-on-year, respectively. In April, cumulative sales increased by 97%, 46%, 64% and 70% respectively year-on-year.

At the same time, large and small construction machinery manufacturers are still making great investments. On April 31st, Rongan Heavy Industries invested in Rongsheng Heavy Industry, a well-known Jiangsu shipbuilding company, held a high-profile conference on the construction of a construction machinery base. The site of the project was located in the construction machinery base of Baihe Science and Technology Park, Hefei High-tech Zone, Anhui Province, with a total investment of 60 yuan. Billion yuan, when completed, will form an annual output of 30,000 hydraulic excavators, 1,000 crawler cranes, 5,000 tower cranes, 17,866 truck cranes, and 500 rotary drilling rigs. It will become the largest domestic construction machinery manufacturer. One of the bases. On May 20, China Railway South Equipment Manufacturing Base held a groundbreaking ceremony. China Railway will invest RMB 3 billion to build five major projects: bridge steel structure, railway construction machinery, offshore engineering machinery, port construction machinery and wind power generation equipment. It is estimated that it will be put into production in early 2012, and by 2014, the annual output value of the project will reach 10 billion yuan.

However, under the background of fiery investment, if the contradiction of oversupply of products is not solved, in the future, construction machinery companies will experience the bitter fruit of blind investment. Although the construction machinery industry is not backward and highly polluting, overcapacity and price warfare have become common problems. At the same time, a series of stringent real estate control policies introduced by the central government this year will bring the real estate industry into a downward track, and the closely related engineering machinery products will inevitably be adversely affected, and the demand outlook will be worrisome.

Homogenization competition leads to overcapacity

For the problem of overcapacity in the construction machinery industry, as early as in 2004, there was a "price war led by the loader." In order to pursue product sales and market share, the loader companies are pushing down each other's prices, one price is 300,000 yuan. The final loader was only a few thousand dollars. In the past two years, the homogeneity of the loader products has been serious. The domestic product R&D technology is relatively mature in medium and small tonnage products. However, in order to blindly pursue sales, some companies even risk zero profit, zero down payment, and zero return. .

In 2009, the entire industry achieved sales of over 140,000 loaders and 95,000 sets of excavators. The transaction volume of the two major products accounted for almost half of all construction machinery products. The huge market demand directly affected the eyes of investors. Up to now, there are more than 50 types of loader manufacturers in the domestic market, 28 major companies have controlled more than 90% of the market share, excavator manufacturers are about 40, and 23 major companies have controlled over 80% of the market. In terms of share, the two leading product manufacturers have experienced a serious surplus, which has also caused the market to “flavour”.

Under the condition of low product quality or equivalent competition, “low-price competition” has become the main sales method, and many manufacturers cannot provide complete, timely and professional after-sales services, and rely only on temporary sales methods to promote the products, which are stable to the industry. Health development has a huge impact. For excavators, sales of nearly 100,000 units in 2009 made domestic companies see business opportunities. Although the excavator's product technology has always been demanding, the market has entered the threshold of non-loaders, but it includes some foreign brands including excavation. Machine companies have promoted and seized the market. Since the first quarter of 2010, many excavator companies at home and abroad have relied on a unified sales policy to instruct sales agents around the country to hold sales promotions. Outside the price fluctuation space, most of the company’s on-site gifts donated by customers continuously refurbished, from gift kits and after-sales services. The period of extension has evolved into small excavators and millions of luxury cars.

In the fierce market competition, the excavator's profits are also being eroded little by little, although the current domestic brand excavator market share is only about 20%, but if the domestic market excavator due to "various 'deformation' promotion strategy" As a result, the imbalance between supply and demand in the market will inevitably lead to overcapacity. Low exports aggravate domestic overcapacity

At present, the export boom of construction machinery is still not optimistic, which also exacerbates the problem of excess domestic production capacity. According to statistics of the General Administration of Customs, in the first quarter of 2010, the import and export volume of construction machinery in China was US$3.76 billion, an increase of 27.5% over the previous year. Among them, imports of 1.77 billion US dollars, an increase of 62.3% over the previous year; exports of 1.99 billion US dollars, an increase of 6.8% over the previous year; trade surplus of 220 million US dollars, a year-on-year decrease of 550 million US dollars.

In the first quarter, the import and export of China's construction machinery presented three characteristics. First, the import growth was far greater than that of exports. The trade surplus gradually narrowed. In the month of March, even a deficit occurred. This is the first time in 51 months that a deficit has occurred; Significant growth, with a share of more than 60% of total imports. In particular, the crawler excavators (mainly second-hand mobile phones) have experienced blowouts again, which has caused impacts on domestic brands. Third, the international market lacks effective demand, and exports have been slow to pick up and have poor regularity. It shows that the market still has unstable factors. Due to the depressed export market, many international construction machinery companies have fought in China. Domestic and foreign manufacturers have introduced more aggressive promotional policies to attract customers.

The competition among domestic manufacturers is fierce, and foreign companies have increasingly intensified their competition in this market. Coupled with the squeeze of profits in the upper reaches of the industry chain, some construction machinery products have entered the era of low profit. It is reported that in 2009, the overall sales profit of construction machinery in China dropped from 5.73% in 2000 to 4.78%, and many companies became foreign-funded parts processing and OEM companies, earning only processing fees.

New real estate or declining demand for construction machinery

In mid-April, with the introduction of the "New Country Ten", the most severe real estate new policy in history, the property market has entered a wait-and-see attitude, the trading volume has continued to decline, and the market has cooled rapidly. In April, the national real estate development climate index (referred to as the “National Housing Climate Index”) was 105.66, 0.23 percentage points lower than that in March and 10.90 percentage points higher than in the same period of 2009. Although it is still in the boom period, it is since 2009 4 The first decline since the month showed a strong adjustment signal. It is expected that there will be significant adjustments in the real estate market in the second and third quarters. The regulation and control of the property market has exerted a great influence on the entire real estate industry chain, and has also brought certain pressure on the construction machinery industry. The construction machinery industry is highly related to investment in fixed assets, and real estate investment can be said to be a strong driving force for investment in fixed assets. From January to April, the investment in urban fixed assets was 4674.3 billion yuan, a year-on-year increase of 26.1%, down 4.4 percentage points from the same period of last year and 0.3 percentage points lower than the first quarter. Among them, investment in real estate development was 993.2 billion yuan, an increase of 36.2% year-on-year; commercial housing completed investment was 685.4 billion yuan, an increase of 34.0% year-on-year, accounting for 69.0% of real estate development investment.

The growth rate of real estate investment exceeds that of fixed asset investment by 10.1 percentage points. The fall in real estate investment in the future will drag down the overall growth rate of fixed asset investment, and the number of construction projects will decrease, which will affect the market demand for construction machinery in the second half of the year. It is understood that during the "12th Five-Year Plan" period, China's fixed assets investment growth rate will gradually fall from the current 30% to 15% to 16%. Therefore, for the Chinese economy, structural adjustment and industrial upgrading will become the focus of future economic development. The construction machinery industry will gradually enter the adjustment period with the fall of fixed asset investment.

Construction machinery companies should seize the current market opportunities, while actively developing high-end products and seizing high-end markets. On the other hand, overseas mergers and acquisitions can be used to acquire overseas acquisitions based on technology acquisition and market acquisition to develop overseas markets and ease domestic demand. Excess capacity.