The Crisis and Challenge Faced by the Construction Machinery Industry

According to the sales list of the top 50 global construction machinery manufacturers in 2022, the sales of the Chinese army accounted for 17.9%, indicating a serious decline. Looking back at the industry situation in 2022, compared to the strong recovery of global powers, China's construction machinery industry is in a state of continuous decline, with the vast majority of enterprises experiencing a significant decline in operating income and net profit. In the first quarter of 2023, domestic construction machinery sales are still shrouded in dark clouds.

The construction machinery industry is facing three crises:

1. Cyclical decline in the industry

According to data from the Construction Machinery Association, since 2004, construction machinery has experienced two peak periods, and in the second half of 2021, the industry has once again entered a downward phase.

2. Radical marketing brought about by price wars

Due to radical marketing, manufacturers gain short-term benefits and continue to increase production capacity, resulting in a large backlog of inventory and severe overcapacity. Radical marketing has caused great damage to the industry ecosystem.

3. Lack of high-end products

At present, in the field of mid to low end equipment, components are gradually being replaced domestically, but some high-end key components still rely on imports from Europe, America, Japan, and other places.

But at the same time, the construction machinery industry also faces many opportunities:

1. Continued strength in overseas markets

Since 2020, the annual export amount of construction machinery in China has maintained a significant increase. At present, China's construction machinery has achieved good development results in the markets of countries along the "the Belt and Road". In 2022, the "the Belt and Road" countries will account for 42.8% of the total export. And in recent years, China's construction machinery products have successfully entered the European and American markets, which is expected to replicate their routes in China and along the "the Belt and Road" to achieve rapid growth in market share.

2. The agricultural machinery market is facing good development opportunities

In response to market demand, multiple enterprises have begun to study the agricultural machinery market. In August 2014, Zoomlion, together with Hony Capital, a domestic PE company, acquired 80% of the shares of Chery Heavy Industry, a leading agricultural machinery manufacturing enterprise in Anhui, with a total price of 2.784 billion yuan, and entered into agricultural machinery. In 2016, Liugong Group and Liuzhou Hansen jointly established Guangxi Liugong Agriculture Co., Ltd., officially entering the field of agricultural machinery. In 2020, XCMG established Xuzhou XCMG Agricultural Equipment Technology Co., Ltd., announcing its official entry into the field of agricultural machinery. After two years of independent research and development, XCMG successively launched the 4D series wheel tractor, tracked grain combine harvester, and four row corn harvester for picking and peeling in the first half of 2022.

3. Aerial work platform market still has opportunities

According to publicly available industry data, in 2022, aerial work platforms maintained rapid growth in construction machinery and equipment, with annual sales of nearly 200000 units, a year-on-year increase of 22%. As the year 2023 marks the bottom of the downward cycle in the construction machinery industry, the sales of most construction machinery are not as good as expected, but aerial work platform market still retains its charm. From January to April 2023, a total of 80479 high-altitude work platforms were sold, a year-on-year increase of 26.7%. It can be said thataerial work platform is not only worth looking forward to in 2023, but also a promising track for the construction machinery industry in the next five years.