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China Research and Intelligence: In April 2009 Digger Exports in China Continued to Slump --In April 2009, China totally sold 10,742 diggers, down by 9.73% YOY and certain improvements compared with the reduction rate of 20.51% in March 2009. From January to April, China accumulatively sold 34,769 diggers, dropped by 10.34% YOY. It is predicted that the sales volumes in the whole year will be cut down within 10%.


The overseas market is depressed. In April 2009, China exported 118 diggers, only accounting for 1.1% of the sales volumes, down by 77.99% YOY, which continued to expand in the reduction rate. In March 2009, the export volumes of Chinese diggers were 142, reduced by 75.13% of the same period last year.


From the part of America and Japan, the world’s two largest construction machinery markets, by the end of March 2009, the employees in the construction industry were cut down by 147,300 in America, accounting for 2.3%. At present, the number of the employment is about 6.38 million, down by 13.2% over the same period last year. In Japan, the sales revenues of three largest construction machinery manufacturers were turned down by 15% (by the end of 31st March 2009), 46.4% reduction in the operation profits and the average gross profits were decreased from 13.5% to 8.5%. Besides, it is predicted that the total revenues and operation profits will be further declined by 21.6% and 50% respectively, leading to the average gross sales profits cutting down to 4.4%.


The diggers are the best selling variety in the earth moving machinery, the sales of the loaders and bulldozers are poor. In accordance with the statistics in April 2009, the sales growth speed of the diggers has already recovered to the expected scope and it is possible that the sales of the loaders and bulldozers will be still lower than the expected level.


The market shares of the domestic brands in Chinese digger industry are increased, the sales of the giant enterprises in the domestic market are better than the average level. In the first quarter of 2009, the market share of the domestic brands was about 26%, slight increases compared with the 22% in 2008. Among the domestic brands, the market shares of the giants were rising rapidly and the market shares of partial regional medium and small brands showed the decline trends, SANY, LIUGONG and YUCHAI all realizing the quarterly increases year on year, in which SANY was increased by 120% YOY. The sales of Hunan Sunward Intelligence Machinery Co., Ltd were dropped YOY attributing to the exports. The sales of Xiamen XGMA Machinery Co., Ltd were increased fast, but there was still certain gap with the expected sales of 1,400.


In April 2009, LIUGONG sold 302 diggers, basically holding the line compared with the 303 of the same period last year and better than the average level. SANY sold 635 diggers with the growth speed of 69.33% year on year, but the growth speed also showed the decline trends month by month. Among the foreign funded digger manufacturers, only Chengdu Kobelco Construction Machinery (Group) Co., Ltd and Volvo exceeded the average growth speed, Doosan, Caterpillar, Hitachi and Komatsu were all below the accumulative sales reduction speed of 10% year on year. But from the part of the accumulative sales growth speed of -24.34%, it was still obvious for the domestic manufacturers to substitute the imported products.

The sales growth in Chinese digger industry is mainly droved by the actual demands from the reconstructions after the earthquake, road constructions in the rural, agricultural water conservancy constructions, highway constructions and mining etc, which is also benefited from the 4-trillion-Yuan investment plans.


At present, Chinese digger industry is not very promising, partial enterprises even cut down the sales conditions by adopting comparative preferential payment conditions so as to finish the sale tasks. However, there is not sufficient construction projects, resulting in the increasing phenomenon of returning the purchase or paying back exceeded the limited time. Whether these hazards will become the actual industrial crisis or not will be determined by the macro-economy trends in the latter half of 2009 in China.


Source: China Research and Intelligence

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Eileen Gu