The Construction Machinery Industry Is Ushering In A "Price Rising Tide".

"Total revenue in March has reached a new high, but we expect sales in April to exceed March." Xugong excavator market sales staff Li Jian (pseudonym) told the twenty-first Century economic news reporter, after entering March, its Internet of things platform statistics excavator working time increased by 30% over the same period, market sales were hot.

The sales of excavators, which have been regarded as one of the weathervane of construction machinery industry and even the barometer of economy, are rapidly increasing. In March this year, the sales volume of domestic excavators reached 49 thousand and 400 units, an increase of 11.6% over the same period last year, a record high in the single month. In the previous January and February, the monthly sales volume of excavators was not over 10000.

At the same time, the construction machinery industry is ushering in a "rising tide". Recently, almost all domestic manufacturers such as ZOOMLION, Sany, Xugong, Liugong, Lin Gong, Shan Tui and so on have joined the price increase army, and many products such as pump trucks, excavators, cranes, bulldozers and so on have also increased their prices.

Respondents pointed out that in March, sales of "new high" was a restorative supplement on the basis of the previous lows. Construction intensive projects resumed support for the sales of construction machinery. In the context of a stable economy, this year's infrastructure investment is expected to continue to increase, and it is expected to reach 20 trillion. Domestic sales of construction machinery may go far beyond market expectations.

Another important reason for the rise in price is that the spread of overseas epidemic has brought pressure on the supply of parts of construction machinery, and the cost of supply chain has increased.

However, after many years of fierce price competition, it is imperative for manufacturers to tighten their business policy. Whether or not the real price increases will still be observed. But the demand for the epidemic and the uncertainty of supply will stop the price war.

In March this year, the total sales volume of 25 domestic excavator enterprises reached 49 thousand and 400, a record high. - Xinhua News Agency

Rapid recovery of excavator sales

According to the data of China Construction Machinery Industry Association, in March this year, the total sales volume of 25 domestic excavator enterprises reached 49 thousand and 400, a record high.

Lv Ying, Deputy Secretary General of China Construction Machinery Industry Association, told the twenty-first Century economic report, March sales figures slightly exceeded expectations, but overall is still reasonable. "First of all, there are seasonal factors. Excavators sell the best every year in March. If they buy early, they will not be able to work during the holidays, and the soil will freeze. If they buy it late, they will affect the progress."

Lu Ying stressed that it should be noted that the "new high" in March was largely a restorative supplement to the previous downturn. The sales growth in the first quarter was still negative. "In February this year, the sales volume of domestic excavators dropped by 50.5%, and in January, it dropped by 15.4%. The sales volume in the two months did not exceed 10000 units. From the quarterly data, the cumulative sales in the first quarter decreased by 8.2%.

Lv Ying also said that many projects were shut down in February due to the impact of the epidemic. Many buyers pushed the delivery date to March. We expect that this situation will continue to April, and then increase the sales figures in April.

Li Jian's experience confirms this point. "From late January, sales of Xugong excavators began to be inhibited by the epidemic. Sales in February were gloomy, and entered the March. With the resumption of work, the depressed demand began to release."

Li Jian introduced, according to Xugong's data of Han Yun's Internet of things platform, in March, the excavator operating rate increased significantly, and the average working time of excavators increased by nearly 30%.

ZOOMLION's big data also gave a similar signal. Its sales staff, Mr. Jin, told the twenty-first Century economic news reporter that the data provided by Ke Yun Valley in connection with nearly 280 thousand construction machinery and equipment platforms showed that since March, the resumption of work in various places has accelerated significantly.

Although sales figures for April have not yet been released, Li Jian believes that sales of Xugong will probably exceed March in April. "This is a situation that has not occurred in any previous years. Affected by the epidemic, the traditional peak season in March will be postponed as a whole, and April is likely to create a new high, at least not much worse than that in March."

He said that after accelerating the resumption of work in March, it is expected to accelerate the resumption of real estate and municipal engineering in April, and that the concrete machinery and cranes after the cycle are expected to usher in a higher growth rate.

Is the "big sale" of excavators released the signal that "China's infrastructure is accelerating"?

Lv Ying believes that boosting sales in March is mainly due to the resumption of projects under construction rather than the launch of new projects. It is expected that the opening of new domestic projects will obviously accelerate in the late stage. However, many projects need the necessary approval process, and the capital will also take some time.

Li Jian believes that in the steady economic demand, this year's infrastructure investment is expected to continue to overweight. "The Ministry of finance will issue 1 trillion of the special debt in advance for the construction of local infrastructure. This year's economic pressure will be enormous. Investment based on infrastructure is a rare source of power in the three Troika."

By the end of March, a total of 1 trillion and 80 billion yuan of new special bonds had been issued across the country, the scale of issuance increased by 63% over the same period last year, and the proportion of investment in infrastructure projects increased significantly.

CITIC construction machinery group Lv Juan predicted that in 2020, China's infrastructure investment reached 19 trillion and 280 billion yuan, an increase of 5.89% over the same period last year. "The same amount of investment, the demand for construction machinery driven by the 10.5 month construction period is higher than that of the original 11.5 month construction period. Therefore, the domestic sales volume of construction machinery in 2020 will exceed the market expectations."

Guo Yuan Securities expects that in 2020, the growth rate of the excavator industry will be about 10%, and the crane industry will exceed 10%. At the same time, the replacement peak of the pump industry will be three years in the 2020-2022 years. It is estimated that the annual turnover will be around 7000-8000 units in the future, while the sales volume of concrete machinery sales in 2020 is expected to reach 20%.

Break the supply and worry the construction machinery "price surges"

It is worth noting that a number of construction machinery manufacturers are launching a vigorous "price surges".

Up to now, ZOOMLION, Sany, Xugong, Liugong, Lin Gong, Shan Hui, Yuchai, Lei Wei, Shan He intelligent and other enterprises have raised some of the product prices. The range of price increases includes pumps, excavators, cranes, bulldozers, loaders static pile driver, grader and many other categories.

On the increase in price range, most enterprises increased the price of small dig by 10%, and increased the price of medium and large excavators by 5%. The price of bulldozers and graders increased by 20 thousand -5 yuan, and the price of cranes increased by 5%-10%. Besides, the supply chain accessories and maintenance service fees of the three thousand kilometers were also raised by 10%.

Li Jian said sales rebounded rapidly in March, giving the price of excavators and other manufacturers the price rise, and in the short term, some products were in short supply, which also drove up prices.

Jiang Feitao, vice director of marketing and investment of the Chinese Academy of Social Sciences, recently interviewed by the economic news reporter in twenty-first Century, pointed out that an important reason for the recent rise in construction machinery prices is that the spread of overseas epidemic has brought pressure on the supply of parts for construction machinery, and the cost of supply chain has increased, and some parts are facing the risk of breaking supply.

The Sany Pump Division issued a notice to customers on the price increase. It also said that due to the spread of the new crown disease abroad, European heavy truck chassis manufacturers have announced a downtime or a reduction in production. The shortage of imported chassis resources is an important reason for the rise in prices.

"Recently, many supporting parts abroad are unable to supply on time, some parts have begun to break up, and European suppliers have also sent information to our enterprises that some of the products that can be supplied may also be broken down next month. Many manufacturers predict that there will be problems in the late supply capability, so they will choose to raise prices ahead of time. Lv Ying explained.

Lv Ying said that from the point of view of the amount, the proportion of imported parts in the whole construction machinery is not large, but this is mainly concentrated in the key links such as engine, hydraulic parts and control components.

A head of the spare parts supervision and Management Department of Xugong Group introduced to the twenty-first Century economic report reporter that the proportion of imported parts in Xugong products is around 15%, mainly concentrated in large tonnage products, involving engines, oil cylinders, sensors, electrical appliances and other products. "Many products are" necking "problems of the whole country, such as large horsepower engines, and domestic. No engine, no need to import. "

? ? ? The official said that at present, Xugong has not yet broken parts. "The purchase of imported materials is long term. The materials needed for production now have been fixed in June and July last year. Our inventory can also meet at least half a year's production, so it will not be affected in the short term, but if the overseas epidemic lasts for more than half a year, it will definitely be affected. "

A Sany official also pointed out that more than 90% of the core parts and components of 31 have been made domestically, and the whole chain core spare parts company has been built from engine, oil cylinder, pump valve motor, bottom plate, four wheel area and even high strength steel sheet. But excavators still need to pick up the Cummins engine and BOSCH Rexroth motor.

Lv Ying pointed out that most of the imported parts are the core components which are hard to replace at present. It is difficult to find domestic supply in the short term, but if the risk of overseas supply continues to rise, it will accelerate the process of localization substitution.

Suspension of vicious competition

In Li Jian's view, the risk of discontinued supply is not the direct cause of the increase in the overall price of construction machinery.

"If the imported products are especially large, for example, the chassis of the Mercedes Benz should be used for the pump truck, the cost is also mainly on the chassis, and the price increase is acceptable. However, it is difficult to explain the price rise of all construction machinery on the whole.

Li Jian believes that the signal that all the price rises of the construction machinery is a signal that after the successive price war, the leading enterprises in the industry call on enterprises to stop vicious competition. Other enterprises have followed, and whether these products will really rise in price is still to be observed.

"The price rise was first initiated by 31 leading enterprises, and other manufacturers were more passive. However, at the time when demand was warming up, the price adjustment policy was concentrated and released. As for price increases, no one will really go up, and no one will dare to go up.

Li Jian explained that this is because engineering machinery has gone through a long-term price war and business policy has been very loose. If manufacturers need to increase their profit margins, the most reasonable thing is to tighten business policy rather than raise prices.

"When your capacity reaches the limit, the price increase will only bring more accounts receivable. If the conditions are met, it is more urgent for the manufacturers to tighten up their business policies, such as increasing the down payment ratio or shortening the installment period."

Lv Ying also believes that from the industry level, after many years of fierce price competition, whether manufacturers really raise prices or fake prices are still not good conclusion.

An excavator agent told the twenty-first Century economic report that no manufacturer, no matter excavator or loader or crane, would dare to raise the price easily. But in the context of supply shortage, the price war may come to an end.

? ? ? He said that many brands are very harsh on the market share assessment, and agents' year-end assessment is also linked to this. Some brands have 35 agents in the same province. Rather than making money, they must achieve market share. Reducing business policy is an important means to expand market share. Li business launched a radical business policy like "zero down payment", "selling the whole machine to send parts" and "life-long free maintenance", making the profits of the construction machinery industry thin.

China is the world's largest single market for construction machinery, and is also the most competitive market. The vicious competition in the construction machinery industry has existed for a long time. Last year, China Machinery Industry Association excavated Machinery Branch issued the "China excavating machinery industry market improper competition risk prompt letter" explicitly mentioned that some enterprises blindly pursue market share, and there is a serious tendency of excessive competition in commercial policy.

Li Jian said that the demand brought by the epidemic and the risk of supply uncertainty will draw a rest for years of price war and vicious competition. In fact, the increase in prices is more about the price return of some products in short supply, and whether the manufacturers will really increase their prices will depend on the number of new projects launched and the duration of the global epidemic.

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