Excavator sales continued to grow in July, showing signs of recovery. Large-scale hydropower projects promote the electrification of the industry.

Recently, the China Construction Machinery Industry Association released data that in July, major domestic excavator manufacturers sold 17,138 excavators of various types, a year-on-year increase of 25.2%. Among them, domestic sales were 7,306 units, a year-on-year increase of 17.2%, and exports were 9,832 units, a year-on-year increase of 31.9%. The average monthly working hours of excavators were 66.1 hours, and the monthly operating rate was 56.7%.

In addition, from January to July this year, major domestic excavator manufacturers sold a total of 137,658 excavators, a year-on-year increase of 17.8%. Among them, domestic sales were 72,943 units, a year-on-year increase of 22.3%, and exports were 64,715 units, a year-on-year increase of 13%.

On August 11, a person in charge of XCMG Machinery stated in response to an interview with a reporter from the Daily Economic News that the domestic excavator industry is expected to maintain steady growth in the next three years.

"On the one hand, driven by the continuous release of policies, the domestic fixed asset investment environment has shown positive improvement, including guiding more private capital to participate in the construction of major infrastructure and social people's livelihood; on the other hand, from the perspective of industry cyclicality, the domestic industry is already in a new round of growth cycle. In the next three years, the industry will maintain a steady growth trend, and the industry ecology will become healthier and healthier," the person in charge said.

It is estimated that the annual export of excavators will be about 100,000 to 120,000 units in the next three years.

Excavators, known as the economic "weather vane", continued the growth momentum since the second quarter in July.

From the perspective of the export situation, in 2025, China's construction machinery exports will face opportunities and challenges such as changes in the situation in Russia and Ukraine, increased demand for infrastructure and mining machinery in Southeast Asia, Africa, and the Middle East markets, and increased penetration in the European and American high-end markets, while also facing the uncertain risks of Sino-US tariffs.

However, data shows that since March this year, the monthly export volume of excavators has steadily exceeded the same months in 2023 and 2024. A research report by Everbright Securities analyzed that as leading Chinese construction machinery companies have stepped up their overseas layout, China's construction machinery exports are expected to maintain a growth trend.

As a core component supplier of excavators, Qiu Yongning, general manager of Hengli Hydraulic, said at the 2024 annual and 2025 first quarter performance briefing that the company's R&D center has covered many regions in Asia, Europe, and North America. In the future, the company will firmly promote the "internationalization" strategy and continue to explore overseas markets.

On August 8, Zhou Jiali, the securities representative of Hengli Hydraulic, analyzed in an interview with reporters that since the second quarter, the company's direct and indirect exports have been relatively excellent. The main reason is that the continued growth in overseas demand is relatively clear. From the perspective of direct exports, the company currently mainly supplies local OEMs in Europe, America, Japan, and other regions, and demand in Europe, America, and Japan is recovering. Europe is cutting interest rates, and capital expenditures are increasing.

"In terms of indirect exports, domestic OEMs have increased orders in Europe, and construction machinery such as excavators, cranes, and aerial work platforms have benefited. In addition, domestic OEMs mainly focus on exporting to Southeast Asia, the Middle East, and other regions. The infrastructure and real estate industries in Southeast Asia are developing rapidly, while the Middle East is seeking a second growth curve and increasing port construction, both of which require a large amount of construction machinery," said Zhou Jiali.

A person in charge of XCMG Machinery also stated that, overall, the export trend of the construction machinery industry is good, mainly due to two aspects: first, the competitiveness of domestic brands is improving, and second, market recovery demand is being released.

The person in charge also stated that, at the same time, with the continuous improvement of domestic product quality, the increasingly complete channel layout, the acceleration of after-sales market construction, and the gradual maturity of new energy products, bringing new value-added opportunities, the export sales of the excavator industry will steadily increase, and it is predicted that exports will be about 100,000 to 120,000 units per year in the next three years.

"1.2 trillion yuan hydropower project" promotes industry electrification

From the perspective of domestic demand, a research report by Everbright Securities analyzed that the previous cycle of sales of construction machinery such as excavators grew rapidly from the bottom in 2015 to the top at the beginning of 2021. Considering that the service life of construction machinery is usually 8 to 10 years, there will be a compound replacement volume growth of about 30% for domestic construction machinery this year and in the next few years, which is expected to strongly support future excavator sales.

Zhou Jiali said that since 2024, the construction machinery industry represented by excavators has continued to grow. With the implementation of many large infrastructure projects, domestic OEMs will actively prepare goods, which will further increase Hengli Hydraulic's orders. "July is generally a slow season, but the growth rate is still acceptable. If the sales feedback from OEMs is good later, which will increase their confidence, the growth rate may increase in September and even the fourth quarter."

Breaking down into large, medium, and small excavators, Zhou Jiali said that the sales of large and small excavators have been good in the first half of this year. Among them, small excavators, which are mainly used in agriculture, water conservancy, and other fields, have continued to grow due to their large stock and continuous demand for updates. However, the growth of medium-sized excavators, which are mainly used in infrastructure and real estate, is still weak.

A person in charge of XCMG Machinery further stated that in recent years, the country has been continuously promoting the development of the mining industry. Under the implementation of policies related to increasing exploration and exploitation efforts, various regions have fully promoted the implementation of the "14th Five-Year Plan" for mineral resources. Fixed asset investment in the mining industry has been growing positively for three consecutive years, with a year-on-year increase of 10.5% in 2024. In the long run, the mining market will still be an important factor driving the rebound in sales of large excavators.

It is worth noting that on July 19, the commencement ceremony of the hydropower project in the lower reaches of the Yarlung Zangbo River was held in Nyingchi City, Tibet Autonomous Region. The total investment of the Yarlung Zangbo River hydropower project is about 1.2 trillion yuan, and it is planned to build 5 cascade power stations. It is planned to put some of them into operation in 2030 and fully complete them in 2035.

A research report by Everbright Securities analyzed that, based on the experience of the Three Gorges and other large hydropower projects, the total investment in construction machinery and equipment accounts for about 10% to 15% of the project investment, that is, the equipment demand can reach 120 billion yuan to 180 billion yuan; considering the plateau construction environment of the Yarlung Zangbo River hydropower project and the preferred use of new energy and unmanned equipment under environmental protection requirements, the actual demand for construction machinery may be higher.

In this regard, a person in charge of XCMG Machinery said that many XCMG Machinery equipment serve hydropower and deeply participate in the Yajiang Hydropower Project. It has also established the Southwest Research Institute to focus on product demand analysis and technology research in extreme construction environments. For the project's early pilot projects, the company has achieved sales of a complete set of green equipment for integrated charging and replacement.

Zhou Jiali also said that the implementation of large-scale projects, including the Yarlung Zangbo River hydropower project, supports the demand for the construction machinery industry in the next few years. On the one hand, it can maintain the stable growth of sales of construction machinery products such as excavators. On the other hand, because the supply of fuel in the lower reaches of the Yajiang River is inconvenient, it will promote the development of electrification of construction machinery, which will increase the overall profitability of the industry.

Article source: Construction Machinery Magazine