Overseas markets: challenges and opportunities coexist

With the Chinese construction machinery industry entering a new growth cycle, the excavator market is showing a positive development trend. According to the latest survey by CME, the sales of excavators are expected to reach 16000 units in June 2024, a year-on-year increase of 1.5%. Among them, the domestic market has performed particularly well, expected to reach 7300 units, a year-on-year increase of 20%. This growth is mainly due to the increase in demand for equipment updates and the impact of a low base in 2023.

Domestic demand recovery: Small excavators lead the market

Small excavators have become the main force driving the recovery of domestic demand. With the active promotion of the "Equipment Update Plan", it is expected that by 2027, the investment scale of equipment in industries such as industry, construction, and transportation will increase by more than 25% compared to 2023. This policy orientation has injected strong momentum into the excavator market. According to estimates, the demand for excavator updates in 2024 is about 72000 units, with small excavators dominating. In addition, by the end of 2023, trillions of additional treasury bond projects will be launched, effectively relieving the pressure on local funds and providing strong support for infrastructure investment. From January to May 2024, China's infrastructure investment increased by 7.5% year-on-year, with 9683 newly started water conservancy projects, a year-on-year increase of 33.8%, further stimulating demand for excavators. Considering seasonal factors, it is expected that domestic demand will achieve significant positive growth from September and October.

Although export sales in June 2024 are expected to decrease by 10% year-on-year, reaching 8700 units, there is still enormous potential in overseas markets. Due to the adjustment of overseas product structure and the high base in 2023, domestic and foreign sales are facing certain pressure in the short term. However, with domestic construction machinery enterprises accelerating their overseas expansion, especially in high-end markets such as North America and Europe, excavator exports are expected to turn positive in the second half of the year. According to data from the China Construction Machinery Industry Association, the import and export trade volume of China's construction machinery from January to May 2024 was 22.292 billion US dollars, a year-on-year increase of 2.06%, of which the export volume was 21.193 billion US dollars, a year-on-year increase of 2.13%. This indicates that the competitiveness of China's construction machinery products in the international market is constantly improving.

It is worth noting that although the entry threshold for the construction machinery market in North America, Europe and other regions is high, the profit level is also relatively high. Domestic complete machine enterprises are actively breaking through these high-end markets, which will bring new growth points to the industry. At the same time, the mining machinery market has also become a key area of concern for domestic enterprises, with its high technical requirements and high profit margins attracting the attention of many enterprises.

Overall, the excavator market is in a critical period of both opportunities and challenges. The strong recovery of domestic demand provides a stable growth foundation for the industry, while the expansion of overseas markets opens up new space for future development. With the continuous improvement of domestic enterprise technological strength and the deepening of internationalization strategy, the Chinese excavator industry is expected to occupy a more important position in the global market.