China equipment market facing slow recovery

China’s construction equipment market remains in a difficult situation after last year’s significant fall in sales, with volumes expected to decline further this year and only a modest recovery likely in 2014.

At the BICES show there was a consensus among manufacturers that this year would see a continuation of the difficult sales environment of 2012, and few are expecting any significant upturn in 2014.

Zoomlion saw a very small fall in its revenues last year and said at BICES that it expected a further small decline in 2013.

Frank Zhang, senior president and general manager of Zoomlion’s international trading company, said the Chinese construction equipment market was still not good; “For next year, we believe the overall market situation will be quite stable – so we are not so optimistic.”

Liugong vice president David Beatenbough, speaking to KHL at BICES, said; “We forecast sales in China to increase +5% next year – it is definitely a recovery, but not a fast one.

“This is a cyclical industry, and we must remember that. We are working on improving the quality of our distribution network, concentrating on our service and support offering. Customers in China are changing, they are looking more and more at the whole life value of a machine.”

Karin Sun, Off-Highway Research’s Beijing-based senior consultant, told KHL that the slowdown in the market “is not over”. The organisation, in its latest mid-year forecast, said unit sales of construction equipment could be -9% down this year, with only a modest +1% rise next year.

Ms Sun said a particular problem for dealers was the large number of used machines being repossessed from customers. Many of the larger dealers in China now have hundreds of used machines of a young age in their fleets. “That is why rental has become such a hot topic for dealers”, she said.

The last 18 months has seen a significant fall in sales of new machines in China. Excavators and wheeled loaders alone make up around 80% of the market, in unit terms, and sales of excavators this year are expected to be around 85,000 units, down from almost 160,000 in 2011.