Ecological performance of the terminal market behi

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Behind the five-year bull market of construction machinery, the ecological evolution of the end market

behind the five-year bull market of construction machinery, the ecological evolution of the end market

China Construction machinery information

the author visited a number of excavator manufacturers and agents, trying to show the ecological evolution of the end market under the background of the five-year growth of the construction machinery market

core view:

the situation of market growth in the first half of the year is basically determined, which does not rule out higher than expected growth, and the prospects for the second half of the year are uncertain

the operating rate of customers is high, but the investment landing is uncertain; The unit price of the project continues to fall, and the industry ecology is facing a crisis

purchasing new machines has become a consumption inertia, and the replacement cycle of equipment has been shortened, which has a great impact on the post market

· I. what is the prospect of the industry

the probability of 2021 is another bumper year for the construction machinery industry, and the market growth situation in the first half of the year is basically determined. Some agents predict that the sales of excavators in March this year may exceed 50000 units, reaching a new high; The market outlook in the second half of the year is uncertain. "I have been in this business for more than 20 years. In the past, it has been growing continuously for about three years. I have never seen the 'bull market' for five consecutive years. I always feel that there is something wrong. It is difficult for me to predict the next trend," said a foreign brand agent

· II. Customer operating rate and project income

most agents report that due to the disappearance of the domestic epidemic and the implementation of investment projects, the operating rate of customers this year is much better than last year, and the starting time is earlier than previous years. A brand agent in Jiangsu said that many customers started work on the second day of the new year, and the government's investment projects and quantities have significantly increased compared with last year. Customers have strong confidence in the return on investment of construction projects. However, some agents said that although the operating rate increased, the availability of funds for engineering projects was worrying. Many projects started first and the construction party advanced funds to enter the site

· III. Changes in the terminal market

1. The competition is becoming increasingly fierce, and the price is further explored. In some regions, the 6-ton small excavation has been reduced to 100000 to 110000 yuan, and foreign brands have lost their competitive advantage in the small excavation market. The sales director of a foreign brand said, "we have been strictly controlling the down payment ratio, which is 30% in principle. If the customer pays 20% down payment, it will need to charge some extra fees. But as far as I know, the down payment ratio of mainstream local brands is generally about 10% - 15%, that is, for 20 tons of equipment, you can pick up the machine by paying 50000-100000 down payment." The manufacturer's assessment pressure on the market share of agents is transmitted to the salesperson layer by layer, and violations have even occurred in some regions. "Although the market demand is strong, the competition between various brands is also more intense. Many agents' salespersons even do illegal things in order to grab orders, complete performance appraisal, for example, the base price of a excavator is 500000, and the customer said that you must do 470000 for me. The salesperson uses all kinds of ways and means, and then supplies the price difference to the customer."

2. Customers' consumption habits have changed. In the past, there was no obstacle for equipment with a long machine age to work on the construction site. This year, an obvious phenomenon is that Party A is more inclined to allow quasi new machines with a machine age of less than years to enter the site. The increase of the threshold for equipment entry has promoted the accelerated elimination of older equipment. In the leasing market, when quasi new machines become the majority, the competitiveness of old equipment becomes lower, which further promotes excavator customers to trade in old machines for new ones, and buying new machines has formed a kind of consumption inertia. "What we often see are: the construction in urban areas is mainly based on new machines, and there are some old cars in the countryside. The non road national third standard has been implemented since April 2016, and it has been nearly five years by 2021. The equipment for more than five years is national second emission, which is not popular at construction sites, difficult to find operators, and environmental protection is not up to standard, and is gradually entering the phase out stage.". The shortening of excavator replacement cycle is indeed good for the main engine manufacturers and agents, but it is also easy to cause market fluctuations and cyclical fluctuations. What industry participants expect is a benign market with stable development and growth, which is more beneficial for enterprises to formulate production plans and control the size of agents

3. Impact on the aftermarket: customers' replacement cycle of equipment becomes shorter, which also has a significant impact on the aftermarket. "From our parts sales data, the average parts sales of a single customer has decreased by nearly half compared with 2019. Many customers have changed new machines, and the maintenance frequency and parts consumption amount have decreased significantly. We are also very confused about where the customers' old cars go, because there are very few old cars in our local rural areas now, which may be flowing to remote areas in the southwest", said an excavator salesman. In terms of the notes explained in the certificate, the average age of the stock equipment in the market is getting shorter, and the customer turnover rate of agents in the insurance market is very high; On the other hand, it is difficult to make money selling new machines with less than 20 tons, and agents face double pressure in the pre market and post market

· IV. changes in the operating conditions of agents

under the current situation of poor profitability in the new machine market and low post market retention, the next step facing agents is the insufficient profit support of after-sales service guarantee, falling into an unsustainable development mode. Agents of some brands have considered chemical resistance - higher chemical resistance makes plastic parts more resistant to rust, rain, detergent and other materials than metal, and transfer the agency right, but it is only an individual phenomenon

(1) "excavator price rise" incident "for the 'excavator price rise' incident that broke out in the industry in February this year, I think the possibility of the price rise landing is very low, which should be the behavior taken by the agent to reduce the negotiation pressure of the salesperson. The company said that the salesperson maintained the original price to the customers, making the customers feel that they are reducing the price and psychologically benefiting". Another insider expressed different views on the collective shouting of "rising" by agents. "I feel that agents are collectively 'eyeing' manufacturers. Last March, the round of price rise was initiated by the OEMs, and this round was initiated by a few agent giants in major sales provinces. In fact, it shows an imbalance in the distribution of interests among agents. The OEMs made a lot of money, but the channels were in a mess, and the debts were high. The agents must have opinions", President Li (a pseudonym) who was interviewed continued to add, "after this round of price hikes initiated by agents, it is bound to trigger a game between manufacturers. Considering the need to increase market share, it is likely that the host manufacturers of local brands will make a certain degree of compromise with agents to realize the redistribution of interests"

· v. the construction unit price has declined, the overdue rate has increased, and there are adverse signs in the ecosystem of end customers

1. The decline of construction unit price has driven down the equipment price

most agents said that although the operating rate has increased, the situation of customers' construction unit price, profit and cash flow has not changed positively. There are many people coming in and many people leaving the engineering circle, in a state of survival and drastic changes

the decrease in the return on investment of the project directly leads to the lower expected price of customers for equipment procurement, which is also one of the driving factors for the popularity of local brands, and some foreign investors to obtain the market by reducing distribution and price

2. The overdue rate has increased significantly compared with last year

the company of President sun (a pseudonym) acts as an agent for three construction machinery brands in different countries, mainly engaged in excavators and loaders. The market volume is small, but it can still maintain a low profit operation in 2020

"in terms of payment collection risk, loaders are much better than excavators, because the price of loaders is not high, and they are bought for their own use as tools. Customers have relatively abundant reserve funds, the repayment period is mostly one year, and the agent's fund recovery cycle is short. But excavators are different. One is that the unit price is high, the repayment cycle is long, and customers generally use project income to repay, with less reserve funds, and the risk of overdue is large."

"Judging from the payment collection at the end of last year, the loader is almost zero risk, and the overdue rate of excavator customers has significantly increased. By the end of 2019, the overdue rate of our customers was about 50% to 60%, and by the end of 2020, this proportion will rise to 70% to 70%. More than 40% of our customers have handled the deferred repayment, which generally lags behind by about 3 months, indicating that it is difficult for customers to recover the project funds by the end of 2020. Fortunately, our size is small, and we use our own funds to help Customers pay in advance, and they can turn it around. "

talking about the next strategic plan, President sun (not his real name) said: "We strive to be a small and beautiful agent, hold our loyal customers, and prepare to expand to group customers in the next step. Our current price of 20 ton excavator is nearly one million, and the technology progressiveness is synchronized with the European market, which is nearly twice as high as the mainstream local brands in the market, but customers recognize the work efficiency, quality stability, energy conservation and comfort of the products, and the repurchase rate is very high."

"in the future, some derivatives of special equipment and excavators will be introduced into the railway and steel industries. At the same time, they will establish contacts with construction contracting enterprises with Chinese prefix, and sell them to countries along the the Belt and Road to seek breakthroughs."

for the current market pattern, President sun expressed his views from the perspective of industrial progress: "I think a market must be developed with a hundred flowers blooming and diversified competition. Pursuing cost performance can indeed improve market share, but it is not conducive to the technological progress of the entire construction machinery industry. Many foreign brands introduced into China's products are still the technology of the 1990s, when production costs fell. In the long run, like loaders, there may be no key technological innovation in products."

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