Dealer confident and optimistic excavator market prospects need to be vigilant

In the first quarter of 2011, the excavator market continued its upward trend, reflecting the "crown crown" of construction machinery and becoming the largest sub-machine in terms of sales of construction machinery. The reporter from China Construction Machinery Business Network separately investigated the major producers and distributors of several excavators on the trend of the excavator industry. In the face of the current hot market, some maintain a high degree of vigilance, while others hold a positive and optimistic attitude. It is full of confidence that the excavator's market prospects will continue to be good, especially dealers, and they are generally optimistic about the overall prospect of continuous growth of the excavator industry.

According to a senior analyst at China Construction Machinery Business Network, the excavator market in China is in a period of rapid expansion. Despite the strong demand, there are many hidden dangers behind the rapid expansion. If we look at the excavator market that has matured in developed countries, we believe that the sales volume of excavators in the future is expected to reach around 500,000 units. Looking at the 2011 New Project Compilation Project compiled by the China Construction Machinery Business Network, the amount of future projects is also increasing, from the needs of urbanization such as rural areas and townships, affordable housing construction, railways, highways, and airports. Projects such as water conservancy, energy, wind power, and hydropower will all drive the rising demand for construction machinery. In particular, construction of guaranteed housing will have a huge impact on the excavator market. With the continuous improvement of the sales network, the continuous enhancement of after-sales services, and flexible payment methods, the enthusiasm of users for purchasing excavators is also rising. But it is behind this continuous rise that a series of hidden dangers have also arisen.

The most frequently mentioned and most often heard is the overcapacity in the excavator market. Despite the sales figures, the rapid growth of the entire excavator industry can be described as a “scattering of flowers”, but after the market gradually becomes saturated, overcapacity is bound to become a major issue that plagues the company and even the development of the industry. A senior executive of Zoomlion once told reporters that the domestic production capacity of excavators in the first quarter of this year has exceeded 300,000 units. Last year, the sales volume of excavators in China was about 160,000 units, which means that there is no expansion in all companies this year. Under the premise of production capacity, the sales volume will double to digest these excess production capacity.

Once the overcapacity occurs, the excavator market may fall into a “price war” and the excavator market will face an overall price war and a sharp drop in profitability. This will make the enterprises that have moved from the price war to the R&D warfare in order to occupy a favorable market. The companies will once again fall into the vortex of the “price war” and will largely hinder the development of the excavator industry. According to a senior analyst from China Construction Machinery Business Network, the Japanese earthquake has caused a shortage of parts such as hydraulic parts for construction machinery in China. It has also slowed down the expansion of Chinese excavator production capacity to a certain extent, and brought a new look to the excavator market. The stable adjustment period, in the long run, is conducive to the sustained and stable development of the excavator market.

Strong market demand, and rapid growth in the performance of industry companies is a good thing, but not enough. In the “Twelfth Five-Year Plan”, the construction machinery industry will exceed the scale of production and sales of 900 billion yuan, which can only be achieved in a healthy and orderly environment. Excess capacity and price wars in the excavator market are not immediately available, and if handled properly, they may never appear. Therefore, while enterprises are seeing the excavator industry continue to climb, they must always be vigilant and take precautions to stay cautious in exploring new markets and long-term strategic planning.