Analysis and Prospect of the Construction Machinery Industry
summary
Under the influence of factors such as the sustained slowdown in global economic growth, severe regional differentiation, and the accumulation of risks in the real estate market, the development of the construction machinery industry is facing significant pressure. In addition, the increasing environmental requirements and the development of digitalization and low-carbon have brought high technological challenges to the construction machinery industry. In this context, there is a certain imbalance in the development prospects of the construction machinery industry between China and key overseas markets. This article is divided into three parts: firstly, an analysis of the sales situation in China and key country markets; Secondly, analyze the trade situation of China's construction machinery industry; The third is to analyze the risks faced by the construction machinery industry.
Key points:
The rise in US interest rates may prompt contractors to turn to equipment leasing, leading to significant uncertainty in the construction machinery industry.
India benefits from the development and growth of the construction and mining industries, and the construction machinery industry will usher in a period of demand growth.
3. The global economic growth continues to slow down, regional differentiation is severe, and the overseas market development of the construction machinery industry is uneven.
4. The global real estate sector is facing a backlog of risks, and the long-term slowdown in growth rate is exacerbating the pressure on the construction machinery industry.
5. With the increasing global environmental awareness, widespread application of digitalization and low-carbon technology, the construction machinery industry is facing technological challenges.
1、 Overall situation of the construction machinery industry
（1） Sales situation of China's construction machinery industry
From the perspective of product sales structure,In 2023, the total sales volume of construction machinery products in China was 601151 units, mainly consisting of lifting work platforms, excavators, and loaders. The sales proportions of the three major categories in 2023 were 34%, 33%, and 17% respectively, accounting for a total of 84%. Among them, excavator sales account for about one-third, consistent with the overall global situation. According to statistics, the total sales revenue of the top 50 global construction machinery manufacturers in 2023 is 223.806 billion US dollars. Among them, the top 20 companies in the excavator business have a total sales revenue of 65.047 billion US dollars in the excavator sector, accounting for 29.06% of the total sales revenue of the top 50 global construction machinery manufacturers, nearly one-third.
Chart 1: Sales Structure of China's Construction Machinery Products in 2023 Data source: China Construction Machinery Industry Association
From a product perspective,According to data from the China Construction Machinery Industry Association, in 2023, among the 11 categories of construction machinery included in the statistics, only gantry cranes, aerial work platforms, and lifting work platforms achieved positive sales growth, with year-on-year increases of 37.4%, 23.4%, and 5.3%, respectively. The remaining 8 categories will experience varying degrees of sales decline in 2023, with excavators, pavers, loaders, and tower cranes experiencing significant declines of 25.4%, 18%, 15.8%, and 13.1% year-on-year, respectively.
Chart 2: Total sales volume and domestic sales volume of construction machinery in China in 2023 Data source: China Construction Machinery Industry Association
（2） Sales situation in key country markets
U.S.A:According to data from the Census Bureau of the US Department of Commerce, the shipment of construction machinery in the United States reached $4.473 billion in November 2023, a year-on-year increase of 9.04%, a decrease of 2.16 percentage points from the previous month; The inventory amount was 9.817 billion US dollars, a year-on-year increase of 8.72%, and the growth rate decreased by 2.18 percentage points compared to the previous month; The new order amount was 4.438 billion US dollars, a year-on-year increase of 9.58%, with a growth rate 3.93 percentage points higher than the previous month; The outstanding order amount was 10.302 billion US dollars, a year-on-year decrease of 12.8%, with a decrease of 0.1 percentage points compared to the previous month. From January to November 2023, the shipment of construction machinery in the United States reached $44.935 billion, a year-on-year increase of 5.56%; The inventory amount was 101.416 billion US dollars, a year-on-year increase of 3.26%; The new order amount was 44.993 billion US dollars, a year-on-year increase of 2.52%; The outstanding order amount was 144.608 billion US dollars, a year-on-year decrease of 18.09%. The American Association of Building Equipment Manufacturers (AEM) predicts that demand for construction projects in the industrial, infrastructure, and energy sectors may improve in the United States by 2024, but rising interest rates may prompt contractors to turn to equipment leasing, thus the construction machinery industry in the United States still faces significant uncertainty.
JapanIn November 2023, the total shipment of construction machinery in Japan was 322.424 billion yen, a year-on-year increase of 0.8%, a significant decrease of 8.4 percentage points compared to the previous month. Among them, the domestic shipment amount was 101.178 billion yen, a year-on-year increase of 4.1%, a decrease of 10.6 percentage points from the previous month; The amount of foreign shipments was 221.246 billion yen, a year-on-year decrease of 0.6%. From January to November 2023, the total shipment of construction machinery in Japan was 3451.855 billion yen, a year-on-year increase of 14.83%; Among them, the domestic shipment amount was 103.1095 billion yen, a year-on-year increase of 9.64%; The foreign shipment amount was 24207.6 billion yen, a year-on-year increase of 17.2%.
India:According to statistics from the Indian Construction Equipment Manufacturers Association (ICEMA), sales of construction machinery and equipment in India increased by 18% year-on-year in the first quarter of the 2023-2024 fiscal year, reaching 27244 units; In the second quarter, equipment sales increased by 31% year-on-year, reaching 30078 units, of which earthmoving machinery increased by 23% and road machinery increased by 65%. Infrastructure construction is the main driving force for the growth of the construction machinery market. Thanks to the development and growth of the construction and mining industries, the Indian construction machinery industry will usher in a period of demand growth. Industry analysis in India believes that in the 2022-2023 fiscal year, the sales volume of construction machinery in India will exceed 100000 units for the first time, and it is expected to increase by 12-15% in the 2023-2024 fiscal year, with total sales exceeding 6 billion US dollars.
BrazilAccording to statistics from the Brazilian Construction and Mining Technology Association (SOBRATMA), it is predicted that in 2023, sales of mining trucks in Brazil will increase by 117%, sales of rollers will increase by 69%, sales of small loaders will increase by 15%, and sales of small excavators will increase by 2%; The sales of loaders have decreased by 30%, hydraulic excavators by 41%, backhoe excavators by 13%, and other products by about 6%. SOBRATMA predicts that the sales of construction machinery in Brazil will decrease by 13% year-on-year to 52400 units in 2023. The main reason for the decline in the Brazilian construction machinery industry is that in 2022, the sales volume of Brazilian construction machinery equipment reached a historic high, and the high base led to negative growth in the industry in 2023; Secondly, unfavorable factors such as rising interest rates, declining infrastructure construction, and reduced investment budgets in the construction industry have led to insufficient development momentum in Brazil's construction machinery industry.
2、 Analysis of Trade Situation in China's Construction Machinery Industry
（1） Analysis of the overall export situation of China's construction machinery industry
From the overall situation of exports,Affected by the sluggish domestic construction machinery industry, there will be a general decline in sales of construction machinery products in 2023. Some construction machinery manufacturing enterprises are increasing their efforts to expand their overseas markets. By 2023, nearly half of China's construction machinery products will be exported, and the total export volume of construction machinery will account for 43% of the total sales volume. In 2023, the export sales of excavators, rollers, graders, and crawler cranes exceeded the domestic sales, with the export volume accounting for 53.86%, 54.59%, 85.73%, and 55.95% of the product sales, respectively. International sales offset some of the impact of the decline in domestic sales on the industry. Among them, excavators will surpass domestic sales for the first time in 2023, with both domestic and international sales showing a trend of initially high and then low. The decline in domestic sales will narrow, and exports will shift from increasing to decreasing, resulting in insufficient momentum for export growth.
From the perspective of the structure of exported products,In 2023, the total export volume of construction machinery products in China was 258617 units, mainly consisting of excavators, lifting platforms, and loaders. The export volume of the three major categories accounted for 41%, 30%, and 18% respectively, totaling 88.56%.
Chart 3: China's export structure of construction machinery products in 2023 Data source: China Construction Machinery Industry Association
From a product perspective,According to data from the China Construction Machinery Industry Association, in 2023, among the 11 categories of construction machinery included in the statistics, only the export volume of excavators and flatbed machines declined, with a decrease of 4.04% and 6.2% respectively to 105038 and 5663 units. The remaining 9 categories all achieved year-on-year positive growth, with tower cranes, aerial work vehicles, gantry cranes, and pavers showing significant growth. In 2023, the export volumes were 1905 units, 71 units, 4772 units, and 209 units, respectively, with year-on-year growth of 130.3%, 65.1%, 62.4%, and 56%, respectively, with an increase of over 50%.
Chart 4: China's export of construction machinery products in 2023 Data source: China Construction Machinery Industry Association
（2） Analysis of Regional Export Situation in China's Construction Machinery Industry
From a regional perspective,In the past three years, the export pattern of China's construction machinery has been relatively stable, with Asia being the main export region for China's construction machinery. From January to November 2023, the cumulative amount of China's construction machinery exports to Asia was 1.797 million US dollars, a year-on-year increase of 8.22%, accounting for 40.27%; Next is Europe, with a cumulative export value of 1.182 million US dollars, a year-on-year increase of 26.7%, accounting for 26.49%; Once again, North America, South America, Africa, and Oceania have accumulated export amounts of 473400 US dollars, 412000 US dollars, 406800 US dollars, and 191000 US dollars, respectively. The cumulative export amounts have increased by -6.88%, 8.26%, 14.8%, and -2.7% year-on-year, with cumulative export amounts accounting for 10.61%, 9.23%, 9.12%, and 4.28%, respectively.
Chart 5: The proportion of China's construction machinery exports by region from January to November 2023 Data source: Wind
Chart 6: Export Amount of China's Construction Machinery Exports by Region from 2021 to November 2023 (Unit: US $10,000) Data source: Wind
From the development trend of China's construction machinery export regions in the past three years, the growth rate of export amount in each region showed a downward trend. The largest decline in growth was in South America, from 104.1 per cent in 2021 to 8.26 per cent in 2023, while other regions saw growth decline by more than 40 percentage points. Among them, North America and Oceania experienced a year-on-year decline in January-November 2023. In the case of year-on-year growth in the export volume of China's main construction machinery products, the growth rate of export amount in various regions continues to decline, reflecting the fact that there is a certain degree of mismatch between the pursuit of scale and high-quality development in China's construction machinery industry, and the product structure still needs to be further optimized.
Risk Analysis of 3. Construction Machinery Industry
(I) global economic growth continues to slow down and regional differentiation is serious, the development of overseas markets in the construction machinery industry is uneven.
The October IMF2023 World Economic Outlook predicts that global economic growth will slow from 3.5 per cent in 2022 to 3 per cent in 2023 and 2.9 per cent in 2024. The World Bank's January 2024 Global Economic Outlook predicts that global economic growth will slow from 2.6 per cent in 2023 to 2.4 per cent in 2024. According to IMF and World Bank forecasts, global economic growth has slowed for three consecutive years, while regional growth divergence has become increasingly serious. Among the developed economies, the economic growth momentum of the United States is still strong, the risk of economic stagnation in Europe is rising, and Japan's economic recovery is weak; among the six ASEAN countries, the growth of five countries except Thailand has slowed down compared with the previous year, and Thailand's economic growth is basically the same as that of the previous year; among the BRICs countries, India's economy continues to grow steadily, Brazil's economic recovery speed has slightly increased, South Africa's inflation uncertainty is greater, and Russia's short-term resilience is obvious. Overall, the global economic growth is still showing a slowdown trend, the regional economic development situation is more differentiated, and the construction machinery industry is facing an unbalanced development environment in overseas markets.
(II) the global real estate sector risk backlog, the long-term slowdown in growth has increased the pressure on the construction machinery industry.
According to the IMF, real house prices have been falling globally since the end of 2022. In the first quarter of 2023, real house prices in advanced economies fell by 8.4 per cent, while emerging markets experienced a smaller decline of about 2.4 per cent. In countries where the proportion of floating-rate mortgages is relatively high and house prices are above the pre-epidemic average, house prices have fallen by double digits. In addition, the size of global commercial real estate financing has fallen precipitously in a high interest rate environment. And in the context of rising interest rates and tighter financial conditions, SMEs in the construction industry are at risk of rising input costs and financing problems, and a large number of enterprises in the construction industry in Western Europe go bankrupt. On the whole, the global real estate sector is still facing greater risks, and the growth rate will slow down or continue for a period of time. The risk backlog of downstream key industries will bring pressure to the development of the construction machinery industry.
(III) the global environmental awareness, digital intelligence and low-carbon wide application, the construction machinery industry ushered in technical challenges.
With the improvement of global environmental protection standards and energy consumption restrictions, the demand for some traditional construction machinery has gradually declined, and the construction machinery industry will face more intense market competition and higher technical requirements. In the process of the industry's transformation to the direction of electrification, digitalization, and intelligence, construction machinery agents are required to continuously update and upgrade their technology and equipment to meet the needs of the market. In addition, they also need to strengthen market development and service system construction. Although Chinese construction machinery manufacturers are constantly introducing electric and intelligent products, the overall product structure still needs to be further optimized, and high-quality development should become the main theme of China's construction machinery industry, and the whole industry will usher in higher technical challenges.
Source: China Export Credit Insurance Corporation (WeChat public number)
