The latest data shows that in November 2022, domestic excavator sales increased by 2.74% year-on-year, achieving the first positive growth in 19 months, reflecting the gradual implementation of the "steady growth" policy of governments at all levels. With the further development of support policies for the infrastructure and real estate industries, and the continuous optimization of epidemic prevention policies, people in the industry have begun to look forward to the spring of 2023.

The sales volume of domestic excavators increased year-on-year

Since the end of the third quarter, the sales of excavators have continued to improve.

The China Construction Machinery Industry Association disclosed on the evening of December 7 that according to statistics from 26 excavator manufacturers, 23,680 excavators of various types will be sold in November 2022, a year-on-year increase of 15.8%, of which 14,398 are domestic, a year-on-year increase of 2.74%; exports are 9282 Taiwan, a year-on-year increase of 44.4%.

It is the first time since March 2021 that domestic excavator sales have achieved positive growth in a single month, and 19 months have passed. Prior to this, the domestic market of excavators experienced a year of hot sales. From March 2020 to March 2021, the average sales growth rate was over 78%.

In fact, domestic excavator sales have picked up since the third quarter of this year. In the third quarter, the year-on-year decline in overall domestic excavator sales narrowed sharply to about 25%, and in the second quarter, the overall year-on-year decline was about 50%, and the year-on-year decline in a single month in October was further narrowed to 10%. At the same time, boosted by the high boom in excavator exports, the growth rate of China's overall sales of excavator machinery (including exports and imports) in July this year has turned positive ahead of schedule.

From the perspective of forward-looking indicators, since the end of the third quarter, the project start rate has increased significantly compared to before. According to the CCTV Finance and Economics Excavator Index, the average operating rate of construction machinery in my country in October was 64.07%, an increase of 2.23 percentage points compared with the average operating rate of 61.84% in the first three quarters. In September and October 2022, the operating hours of China's Komatsu excavators were 101 hours and 102.1 hours respectively, showing a continuous increase from the previous month.

A related person from a leading construction machinery company said that although the outbreaks occurred frequently in various places in November, which had a certain impact on the start of the project in the short term, compared with the previous three quarters, the operating rate still increased. In recent months, the start of construction and sales of excavators have continued to improve, reflecting that the country's steady growth policy in the field of infrastructure has taken effect and is gradually being transmitted.

On December 1, the fourth phase of the national emission standard for non-road mobile machinery (hereinafter referred to as "National IV") was implemented, which also boosted the sales of domestic excavators in a short period of time. The new "National IV" regulations mainly affect the sales of equipment. If a company purchases "National III" equipment before the implementation of the new regulations, it can continue to use it after December 1.

In November, the "National III" and "National IV" two generations of products were sold on the same platform, and there was a price difference of about 15% between the two generations. A salesperson of a certain line of excavator brands told reporters that because the price is affordable and the performance has been tested for a long time, there were many customers who consulted the "National Three" equipment at that time. The inventory of various "National Three" equipment of the brand he sells is in short supply, and there has been a price increase to remove inventory.

The export volume remains high

In terms of excavator exports, the export of excavators in November was 9,282 units, a year-on-year increase of 44.4%, and the growth rate has dropped from the overall 65% this year. The decline in growth rate may be related to the overall decline in the growth rate of foreign trade exports in November. At the same time, industry insiders also reminded that the export volume of excavators is still very impressive, and they have firm confidence in the future export situation of China's construction machinery.

According to the data released by the General Administration of Customs yesterday, in November, my country's exports (valued in US dollars) fell sharply by 8.4 percentage points year-on-year to -8.7%, of which high-tech products (down 23.7% year-on-year in the current month) and mechanical and electrical products (down 11.1% year-on-year in the current month) The year-on-year growth rate of exports in the month further dropped sharply by 16.6 and 10.7 percentage points respectively.

Shenwan Hongyuan interpreted that the sharp drop in exports for the second consecutive month in November mainly reflected temporary supply shocks, while the slow fall in external demand was the secondary reason. If the recent prevention and control measures are optimized, and the intensity of the domestic epidemic does not rebound uncontrollably in the next year, then the recent supply shock phenomenon will be destined to be phased and temporary.

In addition, the above-mentioned construction machinery company said that although the growth rate has declined slightly, it must be seen that the absolute value of excavator exports in November still exceeded 9,000 units, which is still at a high level within the year. From the perspective of enterprises, they still have firm confidence in the export situation of China's construction machinery next year. On the one hand, my country's construction machinery products are currently very competitive overseas; on the other hand, after years of construction, the company's overseas channels, R&D and other layouts have gradually improved.

In 2023, we look forward to "the warmth of spring and the blossoming of flowers"

By the end of the year, the report card for construction machinery in 2022 has basically been finalized. According to statistics from the China Construction Machinery Industry Association, from January to November 2022, 26 excavator manufacturers sold a total of 244,500 excavators, a year-on-year decrease of 23.3%; of which 145,700 were domestic units, a year-on-year decrease of 43.7%; An increase of 64.9%. Domestic sales of excavators have accelerated since the third quarter, and the annual trend of export sales hitting new highs has basically been established.

Looking forward to 2023, under the circumstances of the following three factors, industry insiders predict that the start of construction next spring will be relatively optimistic, which will drive the growth rate of excavator sales to continue to rise.

First, there is strong demand for infrastructure construction. On December 6, the Political Bureau of the Central Committee of the Communist Party of China held a meeting to analyze and study the economic work in 2023, and proposed to "focus on stabilizing growth, employment, and prices", and made it clear that "continue to implement a proactive fiscal policy and a prudent monetary policy." Pacific Securities expects that the government's financial investment in infrastructure construction will not weaken in the short term.

Second, demand for real estate is picking up. Recently, a series of real estate loosening policies have been launched one after another. Among them, the China Securities Regulatory Commission announced on November 28 that the adjustment and optimization measures for equity financing in the real estate industry were described as the "third arrow". So far, the real estate industry has initially formed a multi-dimensional financing support policy system such as credit, bond issuance, trust, pre-sale funds, and equity financing, which is expected to effectively support the start of construction in the real estate industry.

Third, the epidemic prevention policy continues to be optimized. Recently, the "20 Measures" and the new "10 Measures" for epidemic prevention have been released successively. The implementation of scientific and accurate division of risk areas and "quick closure and quick release" of high-risk areas will greatly reduce the impact of the epidemic on the start of the project.