On April 2, the price of Zhonglian Heavy Industry's pump trucks was raised by 5% and 10%; on April 9, the price of Sany Heavy Industry's pump trucks was raised by 5-10%; on April 10, XCMG's price was raised 10%, Zhongda Mining raises the price by 5%; April 11th Sany Mining raises the price by 10%, and Zhongda Mining raises the price by 5%; Liugong marketing personnel confirm that its excavator products have implemented price increases in early April 5 %about. As of press time, some companies said they would follow suit.
From pump trucks to excavators, Sany has become the focus of this price increase. How many companies will follow up? Who will monitor at the executive level? Is it sustainable under the influence of the global supply chain? Whether this price increase can end the "price war", we may wish to make a few big guesses!
1. From pump trucks to excavators, Sany has become the focus of this price increase. How many companies will follow up? What is the desire to increase prices?
Guess: At present, there are as many as 6 companies that have notified and implemented price increases. Why did Sany excavator become the focus of this price increase? In February 2020, Sany's market value exceeded Komatsu and ranked second in the global market value of the construction machinery industry. Is this also a manifestation of financial strength to some extent? The price increase is not suitable for all companies, and it is not necessarily how much. Other companies that follow the rise, if the capital chain breaks, not only does not serve the purpose of increasing market share, it may be counterproductive.
2. In recent years, everyone has been promoting the localization of excavators. If most of the domestic parts are made, is the global supply chain saying valid?
Guess: The localization of the small excavation is relatively high, however, the parts in the engine and hydraulic parts still rely on imports; the domestic substitution of the mainframe is even more limited. Regarding this price increase, industry insiders believe that the demand for Sany price increase may not be particularly urgent. Because SANY has a higher right to speak on spare parts for digging machines, even if it is truly affected by the global supply chain, the price / payment terms / demand and other three hard indicators, the chance of obtaining spare parts is still very high. Taking advantage of the epidemic's impact & supply chain issues, Sany's price increase may still be an opportunity to consolidate its status as an excavator.
3. Why does Zhongda Dig need more imported parts, but instead raises the price by 5%, which is lower, excluding the high total price, what other reasons do you think?
Guess: According to an industry source, in fact, foreign brands have already seen price increases in large-scale excavators, but they have not been disclosed. From this perspective, the spread of domestic mainframes is inevitable, and its price increase may be more urgent. As we all know, from a technical point of view, the larger the tonnage of the excavator, the higher the corresponding requirements for accessories, the higher the matching ability of the whole machine, and the higher dependence on imported parts. The price increase of Da Di is 5%. Excluding the factors of high unit price, the editor believes that there are other reasons that have not been disclosed.
4. Lead the rise and follow the rise. Who will monitor the specific implementation? If the implementation is not in place, what is the significance of the price increase?
Guess: At the 2019 annual meeting of excavators, the "avoid price war" and "rational competition" advocated by the Construction Machinery Association finally got a response in 2020. However, before this, the price war of the excavator was not affected by these "appeals" and "advocacy", and it was still intensifying. Therefore, in order to achieve the goal of ending the price war this time, the implementation is the key.
The previous price war was mainly a battle for market share. When competition is still fierce, product homogenization is serious, and the industry ranking pattern is not yet stable, can the price war really stop? If the price increase lacks strong industry constraints and corporate self-discipline, even if there is a follow-up increase, it may be difficult for anyone to fall into the face of execution.
5. After the last round of irrational user entry in 2011, will the current price increase suppress some users who really need to dig a machine?
Guess: After the last round of digging machine "bubble" baptism, users have become more mature, and the current strategy of winning users with "low prices + payment terms" on the market will no longer attract professional users. If this price increase is not a supply-side price increase, then the price increase will definitely be imposed on users.
After the news of the price increase of XCMG's excavators, a heated discussion was triggered, and the voice of user support overwhelmed the opposition. Supporters believe that the previous price wars brought by the manufacturers to the users are short-lived. "Wool comes from the sheep." The harm of price wars is basically the same as the reduction of service quality and product reduction. At present, the payback period of an excavator is basically 4 years. Considering the residual value after 4 years, I believe that professional users will have a more correct choice. At the same time, users want to increase prices at the same time the quality should be improved simultaneously, in addition, drivers and Taiwan shifts also need to increase prices simultaneously.
6. What is the real effect of the previous price war on the industry?
Guess: In addition to facing the actual supply chain problems, this round of price increase does indeed play a depressing role in terms of price wars, and is also responsible for the enterprise and the industry. This is a positive signal for healthy and sustainable development. In terms of the industry, the top three price increases in domestic excavator sales are expected to drive the industry to return to the competition of quality and value, and to compete more benignly from the post-market, comprehensive strength and full life cycle. I also hope that the first price return of construction machinery will also bring tips and guidance to China's manufacturing industry. If this effect is achieved, this behavior will be of great significance.
