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2. Slow recovery seen in China

After two years of abnormally high sales in 2020 and 2021 thanks to stimulus spending, the Chinese market collapsed in 2022 with a 39 per cent decline. This was not only due to the stimulus money running out, but the impact was compounded by turbulence in the Chinese real estate sector and the country’s difficulties in getting to grips with Covid last year. The only bright spot was the mining segment, which invested in dump trucks and large excavators to take advantage of high global commodity prices.

The market is forecast to continue to fall in 2023, but at a slower decline of about 18 per cent, to settle at just below 195,000 units. Domestic demand may flatten out during 2024-2025, and the recovery will be very slow. A real recovery is expected during the period of the 15th Five Year Plan (2026-2030), primarily as a result of increased sales of compact equipment and the returning replacement demand; by then the market may return to 270,000-300,000 units, but even that volume is still very much lower than what has been seen in the recent past.

A significant challenge to the future market lies in lower demand from the real estate sector, which, in line with past experience, has been closely allied to overall demand for equipment. In the light of the saturated population and overheated supply, demand for new housing projects will now decline, even though construction in the most developed areas may remain steady. The traditional equipment demand from this sector will therefore be significantly eroded, and other sectors will be unable to make up this lost demand.

A full discussion on the state of the Chinese construction equipment market and the outlook to 2027 is available to subscribers to Off-Highway Research’s Chinese Service and Chinese Database Service. For more information about Off-Highway Research’s reports and data, contact [email protected]