October Excavator Domestic and Export Sales Both Show Growth—Is the Industry Turning a Corner?
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On November 10, 2024, financial news reported that in October, domestic excavator sales continued to grow by more than 20%, while export sales also showed positive momentum, with a nearly 10% year-on-year increase. After eight months of decline earlier in the year, overall excavator sales have started to turn positive.
Domestic Market Performance
Industry insiders indicate that the domestic market is currently experiencing mixed conditions. While demand is improving in sectors like water conservancy and agriculture, the real estate sector remains relatively weak. The increase in domestic sales is primarily driven by the replacement demand for older small excavators.
According to statistics from the China Construction Machinery Industry Association, a total of 16,791 excavators were sold in October 2024, marking a 15.1% year-on-year increase. Of this, domestic sales reached 8,266 units, a 21.6% increase, while exports reached 8,525 units, showing a 9.46% increase.
Export Market Outlook
As for the export market, it is transitioning from a high-growth phase to a more stable period. While export growth may slow down in the short term, many industry experts believe that the large overseas market and expanding product range will continue to drive profitable growth for companies. The export market has provided higher profit margins than the domestic market, which has become more competitive and price-sensitive.
Compared to the intense competition in the domestic market, the international market is offering significant opportunities for leading companies to boost their financial performance. Many of these companies, with strong cost advantages and a global market presence, have reported positive net profit growth, indicating a favorable outlook for exports.
Performance of Leading Industry Players
Several leading construction machinery firms, including XCMG (000425.SZ), SANY (600031.SH), Zoomlion (000157.SZ), and LiuGong (000528.SZ), have all reported positive net profit growth, with profits growing faster than revenues. LiuGong, for instance, saw an 8.25% year-on-year increase in revenue, while net profit soared by 59.82%, the most impressive growth among its peers. Despite slight revenue declines for XCMG and Zoomlion, both companies experienced nearly 10% growth in net profit.
In particular, Shantui (000680.SZ) saw more than 55% of its revenue come from overseas in the first three quarters of 2024. Shantui’s overseas business enjoys a higher gross margin, 11.75 percentage points higher than its domestic business. This highlights the increasing focus on expanding overseas sales channels as China’s construction machinery manufacturing capabilities improve.
Zoomlion, another major player, has reported significant changes in its revenue structure in recent years. Prior to 2020, most of the company’s income was generated from the domestic market, but by the first three quarters of 2024, the company’s revenue mix had shifted to nearly 50:50 between domestic and international markets. This diversification in product offerings and increased export share has helped Zoomlion reduce its reliance on the cyclical nature of any single market.
Future Outlook
Looking ahead, many industry insiders remain cautious about whether the industry has truly reached a turning point. However, they acknowledge that the demand for equipment replacement, driven by new subsidy policies for equipment updates, will likely support continued demand in the future.
There is growing investor interest in the sector, particularly since the second half of 2024. XCMG, in its recent investor calls, indicated positive signs emerging in the domestic market, especially with the steady growth in earth-moving machinery sales. The issuance of large-scale government bonds and the introduction of new "incremental policies" supporting equipment updates are expected to help stabilize and revive the industry.
In the long term, the global market for Chinese brands’ construction machinery remains a key growth area. As the 14th Five-Year Plan progresses, increased international sales of Chinese brands are seen as an important opportunity for expansion and growth.
