In the era of fast food, let me first point out the viewpoint of this article: the domestic excavator market is still in the bottom zone, but there are structural opportunities.
In the past three years, the excavator industry has been on a downward trend. The market downturn combined with price wars has led to a lack of quantity and profitability in the domestic market, with some groups such as agents operating on the brink of collapse.
Fortunately, the market began to rebound in 2024, with double-digit growth in the past five months. However, the market reaction is not as optimistic as in the report, and most practitioners feel more pessimistic, confused, and helpless.
Why do you feel pessimistic?
1、 The complaints of end customers become the trump card of confidence. The domestic market has a huge number of excavators, according to the association's data, as of the end of 2023, the number of excavators is about 2 million. The operating rate of these machines is generally insufficient, and sun drying iron is a daily behavior. More importantly, the industry's cash flow is extremely scarce, and most end customers are also struggling to operate. Without work and money, complaints are inevitable. How can excavator salespeople have confidence in the industry in such a customer environment every day?
2、 Agents have not made any money for a long time. Upon closer examination of the data, although the growth momentum has been strong in the past five months, the cumulative sales from January to August amounted to 66335 units, an increase of 4525 units year-on-year, or 7.32% year-on-year. On average, there is an increase of over 500 units nationwide per month, which is not much when compared to various provinces and brands. Moreover, more than 70% of them are small and micro excavators who do not make money, so the operating status of agents can be imagined. Business has no material foundation, emotions cannot be talked about, and faith collapses.
Looking back at the terrifying days of a 40% year-on-year decline or even over 50% in 2022 and 2023, it is indeed beginning to bottom out and rebound. It's just that the growth is in the latter half of the season, after the peak season, and everyone hasn't recovered yet.
3、 Other agents also lack confidence in the industry, which in turn affects each other. Although the sales and profits of various brands are not the same, they are still evenly matched. Everyone is in the same situation. Although they won't give in when competing, they have a lot of common words when roast. In response to this point, we won't make a big deal out of it, nor will we offer any inspirational advice. Instead, we'll share an online joke. Everyone is an adult, how to recognize this joke, it's up to you to decide.
02. Who is buying an excavator?
There are two million excavators in stock, and some of them are drying iron every day, making it difficult to collect accounts. In this situation, 66335 units were sold from January to August, which is not a small number. In the era of the stock market, there should be very few beginners who do not understand the market situation when buying excavators, and most of them are veterans who have been crawling in the industry for many years. Why do they know there are tigers on the mountain and lean towards them?
Out of over 60000 Taichung, nearly 80% are small and micro excavators. You should know that the saturation of the small digging market is already very high, and the micro digging team fee was okay three years ago, but it has decreased by at least 30% in the past two years. Furthermore, most micro excavators do not have a driver's cab, with no air conditioning in summer and no warm air in winter. Dust is constantly present throughout the year, making it difficult to even hire a technician. Buying these small excavators, are they like Europeans and Americans doing garden repairs?
Who is buying an excavator? To answer this question, I can't find it on Tiktok, Kwai and Xiaohongshu, nor on the hot search rankings. So where is the answer? Under your feet. It is recommended that the management of the agent conduct research in the first tier market as much as possible. Not to listen to complaints from end customers, but to discover market opportunities.
03. Analysis of Future Trends in the Construction Machinery Industry
A simple analysis of industry trends can use the MAN rule. The MAN rule is mainly used for analyzing customer purchasing potential, which means that buyers must possess three elements: money, authority, and need. The MAN rule can also be used to judge industry trends. For construction machinery, its deduction is based on three elements: money, authority, and need.
Excavators are involved in a wide range of engineering projects, mainly including real estate, infrastructure, rural construction, and mining.
Real estate has reached its historical peak, and land finance has also run out of resources. The building materials industries such as steel, sand and gravel, cement, and glass, which are complementary to real estate, have also been hit hard.
At the beginning of 2024, 12 provinces were required to strictly control the construction of new government investment projects, including transportation (highways, subways, light rail), municipal, industrial parks, various buildings and shantytowns renovation, except for schools, hospitals, water, electricity, heating and other livelihood facilities.
In August, six departments including the Ministry of Finance and the Ministry of Housing and Urban Rural Development jointly issued a notice on the "Management Measures for Municipal Infrastructure Assets (Trial)". According to the document, it is strictly prohibited to illegally borrow money for municipal infrastructure assets that have no or insufficient returns, and it is not allowed to increase implicit debts.
Real estate and infrastructure, as the two pillars of the industry, are difficult to rise in the short term. Seeing these, my heart is indeed heavy.
Of course, there is also good news. For example, nearly 20000 builders and more than 6200 sets of large machinery and equipment have been put into construction along the entire Pinglu Canal in Guangxi. The accumulated excavation volume of earth and stone has exceeded 200 million cubic meters. Cambodia's Dechong Funan Canal excavated 10 kilometers in 17 days, and the infrastructure maniac dispatched 2500 large machinery (including 500 excavators) for overnight construction
China is crazily digging canals with a heavy investment! From south to north, the six major provinces are all making every effort to take action:
'Bloodshed capital' crazily excavates canals
·Anhui has invested 95 billion yuan to build the Jianghuai Canal, which was opened for navigation last year;
·Guangxi will invest 68 billion yuan to build the Pinglu Canal, with plans to complete it by 2026;
·Hubei plans to spend 74.8 billion yuan to open up the Jinghan Canal and straighten the Yangtze River;
·Henan, investing 141.6 billion yuan, plans 47 inland waterway transportation projects, integrating into the Yangtze River Delta in one fell swoop;
·Hunan, investing 150 billion yuan to open up the Xianggui Canal, connect to the Greater Bay Area, and gain two major seaports;
·The most aggressive is Jiangxi, which plans to spend 320 billion yuan to build the Zhejiang Jiangxi Guangdong Grand Canal, surpassing the Beijing Hangzhou Grand Canal and becoming the world's longest canal
Due to various factors, these projects cannot be fully realized. The author would like to remind everyone that infrastructure is also undergoing track changes, with high-speed rail, subway, and highway construction slowing down, while canals, reservoirs, pumped storage power stations, etc. are being increased.
More noteworthy is urban renewal. This marks China's transition from the era of large-scale infrastructure construction to the era of large-scale maintenance. Many cities have renamed their "Housing and Urban Rural Development Bureaus" as "Housing and Urban Renewal Bureaus" and have successively completed their listing. This is strongly related to the peak of real estate and the suspension of infrastructure, but it does not conflict. Please understand carefully.
Road zippers have become a national joke, sponge cities are flashy but not practical, and many cities look at the sea at their doorstep. These are both heartbreaking and hateful. I hope the Housing and Urban Renewal Bureau will be ashamed and brave, not like the Chinese men's football team!
Is the renovation of old residential areas about painting and adding elevators to the old houses, or demolishing and building on the original site? It depends on public opinion.
Urban renewal should consider people's livelihoods, and of course, it also depends on whether the financial resources are sufficient. In my personal opinion, if you have money, do better; if you don't have money, do less! Don't engage in egalitarianism, whoever benefits will invest, and whoever invests will be responsible. Don't be afraid to spend money! Don't waste money!
Finally, let's talk about willingness again. Willingness can be divided into two aspects: one is the manufacturer's willingness, and the other is the customer's willingness. Manufacturers with strong or moderate intentions naturally have different business policies. Customer willingness mainly depends on engineering and funding, as well as past experiences.
The market is indeed full of difficulties and challenges, so instead of sitting in the office sighing, it's better to take a walk in the market. Of course, it is important to stay away from poor customers. This industry has long been polarized, and it is better to visit poor customers by watching videos in the office.
