Top 10 Characteristics of Chinas Agricultural Machinery Market in 2023 Appear
"I don't know if the grapevine in the courtyard is falling this morning, but it is suspected that the forest flowers bloomed last night." In the cold north wind, the first snowfall of winter in the north scattered dust, and the train of time inadvertently entered the last month of this year's journey. We cannot help but marvel at the fleeting passage of time, the aging of our faces, and the fact that they are more likely to evoke emotions and trigger contemplation.As agricultural machinery professionals, we are all aware that once the traditional concept of "golden nine silver ten" is passed, this year's market operation is basically coming to an end, and there can be a general conclusion on whether it is good or bad.
Throughout the journey of 2023, it has not been easy. Based on the current development status of the industry, ten main characteristics of the domestic agricultural machinery market have been summarized.
The first characteristic is a slight increase in industrial scale and a significant decrease in profit levels.
Fundamentally speaking, it is not difficult to predict that the scale of the agricultural machinery industry will continue to steadily grow this year, creating new scale output values. This is related to trends such as product large-scale, multi category, and high-end, and also demonstrates the normalization of stable operation in the agricultural machinery industry. Out of sync with this, it is expected that the overall profit growth rate of the industry will likely decline. This judgment is mainly based on two main reasons: firstly, the implementation of the "National Three to National Four" emission upgrade policy in 2022, and various enterprises adopting more promotional strategies to cope with the increase in engine costs and maintenance costs, will undoubtedly reduce profits; The second point is that in response to the exceptionally fierce market competition, many companies have continuously launched promotional policies to reduce inventory, which has lowered their profit levels.
The second characteristic is that as the Matthew effect deepens, competition accelerates shuffling.
Throughout this year's domestic agricultural machinery market, it can be said that there has been a sharp decline, whether it is traditional categories such as large and medium-sized tractors and wheeled grain combine harvesters, or niche categories such as bundling machines and rolling shutters that have received attention in recent years, all of which have experienced a simultaneous decline. According to incomplete statistics, the overall sales of agricultural machinery in the market have declined by more than 30% during the same period. Even the animal husbandry machinery industry, which has always been optimistic about, has encountered a "cold wave" due to the decline in prices of cows, livestock, pigs, milk, and other products. The overall decline has exceeded 20%, which further tests the tolerance and development resilience of enterprises this year.
The third feature is that emissions trigger overdraft and squeeze market share.
The aftermath of market overdraft caused by the promotion of national three to national four is probably the biggest cause of the sluggish agricultural machinery market this year. In fact, throughout the development process of the agricultural machinery industry, every year the emission upgrade of power machinery is implemented, it will cause market sales overdraft, affecting the market trend of the second year without exception. Last year, a new round of emission upgrades was finalized, which inevitably affected the market this year. Considering the increased cost of engine upgrades and reliability issues with new products, the vast majority of power machinery enterprises have unanimously adopted the "National III" product surprise production and centralized clearance strategy. Many users have also chosen to consume in advance, and overdraft is a common phenomenon.
The fourth characteristic is to restart rational consumption and focus on performance.
As the maturity of the agricultural machinery industry increases year by year, consumers are more focused on job performance when purchasing products. The trend of blindly following the trend and blindly pursuing large-scale and intelligent products has greatly decreased. They attach more importance to the reliability and applicability of product operations, and their awareness of "intelligence and reliability first" is becoming more widespread. Users are becoming more cautious when purchasing products. Not only that, with the increase in the number of agricultural machinery, the level of user income has decreased, consumer enthusiasm has been dampened, and market growth has shifted from purchasing new machinery to updating existing stock. Weak demand has become a common phenomenon.
The fifth characteristic is the increase in demand satisfaction and the arrival of market platforms.
At present, the domestic agricultural machinery industry can independently research and develop, manufacture more than 4000 agricultural machinery products in 65 major categories, 350 medium categories, and 1500 small categories required for 7 categories, including agriculture, forestry, animal husbandry, fishing, agricultural transportation, and agricultural product processing. The innovation ability has been increasing year by year, and the substitution of imported products such as cotton pickers, sugarcane machines, and large silage machines is accelerating. At the basic level, it can already meet the demand for agricultural mechanization.
The sixth feature: Subsidy policy assistance, with "one big and one small" efforts.
To be sure, the agricultural machinery purchase subsidy policy implemented since 2004 has played a decisive guiding, driving, and promoting role in the development of the agricultural machinery industry, helping it move towards a higher, better, and more advanced level. Since the beginning of this year, the subsidy for purchasing agricultural machinery has also been adjusted in different product types and models, with some increasing and others decreasing. Policy guidance and adjustments have been made to market demand, such as increasing the subsidy for large and medium-sized tractors, increasing the subsidy for high horsepower products, and reducing the subsidy for small and medium-sized horsepower products, promoting large-scale development.
In line with factors such as land transfer and trusteeship, rapid development of cooperative organization users, and protective farming, the trend of large-scale development of agricultural machinery products is obvious. The support policies for mechanization in national hilly and mountainous areas have accelerated the development of the small-scale machine model market. In addition, this year's "one big and one small" agricultural machinery equipment has risen to the national policy level, and has been piloted in provinces such as Heilongjiang, Jiangsu, and Guizhou, achieving significant results, becoming a new engine for the development of the agricultural machinery market.
The seventh characteristic is that export business has declined, while Russia has become increasingly hot.
This year, China's agricultural machinery export business has experienced a decline, which is closely related to the international situation. Overall, after three years of epidemic damage, overseas business is still in a period of adjustment and recovery. In addition, the overall international economic situation is weak, the political conflict between Russia and Ukraine, the political conflict between Palestine and Israel, and the trade friction between China and the United States have affected domestic agricultural machinery exports as expected. In the turbulent international situation, Russia has been sanctioned by the European Union and other countries, shifting its demand towards China. Agricultural machinery is also one of many industries, which has led to a rapid increase in trade volume between the two countries.
The eighth characteristic: inventory equivalent remains unchanged, and pressure spreads next year.
This year, with a sharp decrease in market demand and a decline in sales, a significant portion of the output of agricultural machinery manufacturing enterprises has turned into inventory. On the one hand, manufacturing enterprises must maintain normal personnel expenses and have to start production. Sales cannot be turned into inventory, for example, many large and medium-sized towing enterprises are like this; On the other hand, there are also optimistic judgments about market sales expectations that have caused inventory, such as corn harvesters, which are the main products sold in the second half of the year. Most companies did not predict such a significant decline in the market in the first half of this year, and many reserve and distribution products have become inventory. The large inventory this year will inevitably affect the production of enterprises next year, and this pressure transmission is inevitable.
The ninth characteristic is that stock competition is dominant and the second-hand market is emerging.
This year, the market increment is dominated by the updating of existing products, and the replacement of second generation mobile phones has become a common demand. Looking back at the history of the agricultural machinery market, 10 years ago, the domestic agricultural machinery market experienced an all-time peak in sales. The machinery market, represented by large and medium-sized tractors, wheeled wheat harvesters, tracked rice harvesters, and corn harvesters, fully exploded. Among them, large and medium-sized tractors continued for four consecutive years from 2013 to 2016, with annual sales exceeding 500000 units; From 2013 to 2016, grain combine harvesters sold over 250000 units annually for four consecutive years, with a total of over 3 million agricultural machinery products sold in the market over the past four years. Coupled with the huge volume of products sold in the previous market, it is now inevitable to enter the stage of elimination and renewal. It is also expected that the second mobile phone market will strengthen.
Not only that, in terms of changing user groups, the number of new machine buyers has sharply decreased. The most fundamental reason is that due to insufficient confidence in agricultural machinery investment, they dare not act recklessly. Especially this year, due to factors such as fierce competition in operation under the saturation of social agricultural machinery and rising costs of agricultural materials, the return on investment in agricultural machinery has decreased, and the number of new entrants has decreased.
The tenth characteristic is to innovate the business model and tap into the potential of the collection.
To elaborate on the characteristics of this year's agricultural machinery market, innovative business models are essential. For example, the popularization and innovation of agricultural machinery finance is one of the hotspots. As is well known, there are two long-standing irregularities in the operation of agricultural machinery: one is the credit distribution of manufacturing enterprises to distributors, and the other is the advance payment of subsidies from distributors to users in sales. As the saying goes, borrowing money is easy but asking for it is difficult, which is also a huge risk point in the operation of agricultural machinery business.
The road ahead is arduous, and opportunities and obstacles coexist. Summarize the past, accumulate strength, in order to start again. No matter how difficult the future journey may be, agricultural machinery workers have the spirit of not giving up, not afraid of hardship, and not afraid of difficulties. They innovate and strive hard, forge ahead, and every year will definitely be better!
