Where does the confidence of manufacturers to expand high machine capacity come from?

In 2023, the overall sales of the high machine market remained on the rise, but the growth rate has declined for many months in the second half of the year. At this time, Sany and Xugong two major giants have a new action. On November 23, Sany announced an investment of more than 10 billion yuan in Huzhou to build the national headquarters of Sany high-altitude machinery and the Trinity Yangtze River Delta Research Institute, which will form an annual production capacity of 150,000 units. On December 18, the second phase of Xugong fire intelligent Manufacturing Base was officially launched, and the annual production capacity of high machine products is planned to be 60,000 units, aiming to build a pilot factory for aerial work platforms.

In fact, with the influx of major manufacturers, the high machine market has become a "blue ocean" into a "red Sea" in just a few years, the market driven by equipment manufacturers and lessor, is now suffering from weak growth, homogeneous competition and other development difficulties. At such a time, Sany, Xugong and other giants are still expanding production capacity on a large scale, and where does their confidence in the market come from?

First, domestic sales maintained a high growth

In the past two years, in the overall downward environment of the construction machinery industry, high machine has become a rare best-selling product category. From January to September 2023, the cumulative sales volume of China's aerial work platform was 16,291 units, an increase of 9%, of which the domestic cumulative sales volume was 109,659 units, an increase of 10%.

Although China's high machine market per capita possession is low, but the growth is very rapid. In 2013, China's high machine sales of new machines only 1725 units, 2022 rose to nearly 200,000 units, the entire high machine market annual average growth rate of more than 60%. Up to now, the domestic aerial work has exceeded 500,000 units, and it is expected that the market will reach 627,700 units in 2023, an increase of 40%. It is expected to exceed 1 million units by 2025. It can be said that China's high machine market has completed in ten years the road that developed countries almost took 30 or 40 years to complete. Today, the penetration rate of high machine products is still improving. Major companies also achieved outstanding results in 2023, providing confidence for manufacturers to expand production capacity. In the first half of 2023, the revenue of Xugong high machinery sector increased by 56.43%; In the first three quarters of 2023, Zoomlion aerial work machinery grew by more than 40%, and its market share ranked second in the domestic industry; Zhejiang Dingli achieved total revenue of about 4.742 billion yuan in the first three quarters, an increase of 13.77% year-on-year, handing over the best "report card" over the years. In the "Access International" magazine published by the British KHL Group's "Access International" magazine, five Chinese enterprises such as Xugong, Zhejiang Dingli, Zoomlion, Lingong Heavy Machine and Xingbang Intelligence were listed. Not only manufacturers, but also high machine lessors will perform well in 2023. The fleet management scale of Hongxin Construction and Development's aerial work platform has further expanded, with the total number reaching about 175,000 units. The average utilization rate of the Group's major operating equipment in the first three quarters of 2023 was higher than the same period in 2022, and the return on assets was generally healthy. Another leasing leader, Huatie Emergency 2023, achieved revenue of 3.215 billion yuan in the first three quarters, an increase of 38.35%; Net profit attributable to shareholders of listed companies was RMB562 million, up 29.61% year on year. As of September 2023, the management scale of China Railway emergency aerial work platform has exceeded 116,000 units, an increase of 73%, and in September 2023, the company's rental rate is more than 89%.

Second, export growth has boosted business confidence

2023 China's construction machinery export growth stage pressure, but the overall export sales remain high, a number of enterprises high machine export sales growth rapidly. In August 2023, Sanhe Intelligent held a large-scale delivery ceremony for overseas orders of high-altitude machinery and equipment, and more than 100 sets of various types of high-altitude equipment were sent to Europe, North America, South America, the Middle East, Southeast Asia and other countries and regions, with a total amount of more than 20 million.

As of October, the overseas sales amount of Sanhe intelligent high machine products increased by nearly 230% year-on-year; On the other hand, Xugong high machine exports in the first half of 2023 increased by more than 300%. In the second half of the year, the growth rate of overseas sales of high machines has also fallen, but overall, the performance of overseas markets in 2023 has brought no small confidence to the industry. "Next, Sinbang will fully accelerate its global localization layout." Liu Guoliang, chairman of Xingbang Intelligence, revealed that Xingbang Intelligence originally planned to account for 50% of overseas sales in 2025, and from the current development point of view, this goal is expected to be achieved in 2024. In addition, with the deepening of China's "Belt and Road" initiative, a number of countries along the way have promulgated infrastructure-related laws and regulations and policy planning, and a considerable part of urban infrastructure construction projects need to use aerial work platforms. These regulations and policies help to stimulate the demand for high-altitude aircraft market in countries along the way and promote the development of overseas high-altitude aircraft market.

It should still be noted that global geopolitical risks have intensified in recent years, and international trade frictions have continued. Chinese-made aerial work machinery products have been the United States for "double reverse" investigation and levy taxes, the recent European Commission also announced the decision to launch an anti-dumping investigation on the mobile lifting platform and complete sets of loose products originating in China. The implementation of the "double reverse" tax rate will have a certain impact on the corresponding overseas market development and profitability. Chinese enterprises must actively make adequate preparations for the review of the "double reverse" investigation. At the same time, we can actively respond by increasing the development of non-trade friction overseas markets, increasing cost control, constantly optimizing the supply chain, accelerating product innovation, improving product competitiveness, opening up new application scenarios, and increasing domestic market penetration.

Third, diversification of application scenarios to promote domestic demand growth

In addition to the increase in number, the application scenarios of high machines have also moved from a single to a far, from the initial application of building construction and shipbuilding industry to the development of residential areas, old urban renovation, advertising, municipal engineering and other fields. In 2017, it was mainly used in shipbuilding and construction, and more municipal projects began to enter around 2018. In 2022, it will be widely involved in the transformation of old residential areas and greening projects.....

Due to the wide downstream application of aerial work platform, its periodicity is weaker than that of traditional construction machinery. In the United States, the ratio of high machines in construction and non-construction applications is about 3:1, and in Europe it is about 3:2, which has been more stable in recent years. Therefore, compared with traditional construction machinery, the aerial work platform industry is less affected by fixed assets and infrastructure investment, and the cyclical characteristics are relatively weak. In the future, with the increase of labor costs and safety concerns in China's construction industry, domestic aerial work platforms are expected to continue to penetrate. In addition, at the policy end, the state also intends to promote the high-level development of the construction machinery industry and the transformation of green intelligent manufacturing. The aerial work platform industry is expected to grow considerably with the promulgation of the policy. At the same time, the state has introduced a number of urban renewal, urban village transformation related policies and advocacy, urban renewal and transformation need to use aerial work platform, equipment demand is expected to start and deepen with the transformation of urban villages around the country. However, it should be noted that although the medium and high machine market has maintained a rapid growth rate in the past few years, the growth rate of new machines has tended to slow down, and sales have declined for many months in the second half of 2023. On the other hand, the high machine rental market is also facing the dilemma of "high, low, long, short", that is, the production speed is too high, the utilization rate is too low, the payment time is too long, the product life and customer loyalty are too short. In this situation, although many enterprises and practitioners are still optimistic about the future of the high machine industry, they cannot blindly expand production capacity. With the transformation of the high machine market from "increment" to "stock", manufacturing enterprises on the one hand should work hard in design and production to enhance the competitiveness of product differentiation, on the other hand, they should also build a good after-market service system, and contribute to the healthy development of the high machine market together with the upstream and downstream of the industry.