The monitoring results from China Construction Machinery Market Research Center on the market price of domestic excavators in March 2022 show that the market price of domestic excavators continues to decline, but the decline is obviously slowing down. The sales price of small excavators was slightly lower than that of individual provinces, and even more than that of small excavators; The sales transaction price of medium and large excavators continues to decline, but the decline is slowing down.
In March 2022, in the domestic excavator market, the sales transaction price of large excavators decreased by 5.46% month on month, slowing down by 2.78 percentage points; The sales transaction price of medium-sized excavators decreased by 4.25% month on month, slowing down by 3.30 percentage points; The sales transaction price of small excavators decreased by 2.84% month on month, slowing down by 2.42 percentage points.
In terms of the change of excavator sales transaction price in subregions and provinces, the places where the sales transaction price of small excavators is flat month on month are Jilin, Tianjin, Xinjiang and Sichuan. There is a trend of price correction in Gansu and Shandong, but there is still a decline of more than 10% in Liaoning, Hebei, Guizhou and Fujian.
The sales transaction price of medium and large excavators maintained a high decline of 10% in Liaoning, Ningxia, Hebei and Inner Mongolia, and the price decline in some areas was as high as 12%.
Market sales fell and product prices continued to fall. In March 2022, the domestic excavator sales volume was 26556 units, with a year-on-year decrease of 63.6%. Both volume and price have fallen, and the operation pressure of the industry is facing a test. "The volume is shrinking, but the price is still falling. Not only the sales prices of excavators, including cranes, are falling. For our agents, this pressure is unprecedented." A head brand agent told today's construction machinery reporter.
The net profit of not only agents but also manufacturers is not ideal. According to the 2021 annual report of listed construction machinery companies, the net profit of listed companies generally decreased without increasing income.
Under the pressure of profit, the demand for increasing the price of excavators has a long history.
At the end of March this year, Sany Heavy Machinery began to implement the comprehensive price limit policy for nearly one month. There were many onlookers and few followers. Some commentators believe that Trinity is: "a false shot, the price is faster than anyone!" Although this remark is a little cruel, no one has the courage to put all his eggs in one basket for the test of price in the fierce market competition.
In terms of the essence of market competition, Michael Porter, the "father of competitive strategy", pointed out that there are three general strategies to maintain an advantageous position in the highly competitive market: cost leadership strategy, differentiation strategy and centralization strategy, also known as centralization and specialization strategy. The cost leadership strategy has become a prominent competitive chip in the excavator field where the product line differentiation is not prominent. With the increasingly fierce competition in the industry, the overall return on investment in the industry may decline.
The small excavation that has "lost money and earned money" and the medium and large excavation with continuous downward price will still provide a certain profit support for the main manufacturers of Excavators Based on the strict control of the supply chain system and the cost reduction brought by the advantage of scale. However, if the competition without bottom line is superimposed with a more substantial downward cycle decline, even the head enterprises and agents may not be able to stand the superposition of these dual challenges.
As Qi Jun, honorary president and special adviser of China Construction Machinery Industry Association, said: "price competition is inevitable. As long as there is a market, this is the Jianghu, and there is the law of the jungle. However, in this price war, agents should firmly hold their bottom line, not forget their original intention of operation because of their desire for sales and scale, and consider how to live healthily."
This is true for agents and for manufacturers.
