Trend of Agricultural Machinery Market in 2023

The switch of national fourth product marks the stage of the agricultural machinery industry moving towards mid to high-end products, and high-quality products continue to lead and drive the pace of industry development. The agricultural machinery market in 2023 has become the most anticipated year, presenting a competitive situation of phased market adjustments, industry restructuring, and complex and ever-changing user needs.
1、 Judgment on the overall market situation in 2023

Since December 1, 2022, agricultural machinery enterprises have focused on promoting the switching and listing of national fourth grade products, utilizing the time before the sales off-season to advance market layout and complete the mass launch of products. Most agricultural machinery enterprises are gradually increasing their product promotion and promotion efforts, striving to gain a first mover advantage in the sales of national fourth grade products.

Overall, there are some phenomena and patterns that can be observed in the market changes this year. In 2023, the agricultural machinery market will show an L-shaped adjustment trend in the first half and a V-shaped reversal trend in the second half. The market will show a flat coal shaped trend throughout the year, and the overall market will continue to experience phased deep adjustments. From the perspective of product types, it is not ruled out that there will be a decrease of about 40% in annual demand for products with severe overdrafts such as large and medium-sized trailers and wheat harvests. From the perspective of regional demand, regions and products with large initial ownership, high mechanization rate of cultivation and harvest, severe market overdraft, and low subsidy ratio will experience a sharp decrease in incremental demand and a weakening of stock updates in the short term. From the perspective of market share of individual enterprises, the market share of CR3 products such as large and medium-sized tractors, track harvesters, and wheat harvesters will continue to increase, and the market concentration will further increase. The competitive advantages of top and advantageous enterprises will become more prominent. Leading companies such as Da Zhong Tuo and Mai Shou will have a market share of over 30% in actual sales for the first time.
From the perspective of phased demand characteristics, the traditional peak line of sales peak season and peak month cycle will be flattened and delayed, and the market wave line will fluctuate in an irregular zigzag shape. It is predicted that the traditional peak season demand in the spring market will be delayed by about 20 days, and the peak season demand in the autumn market will be advanced by about 10 days. The wheat machine market is mainly concentrated in the first half of the year, and this year's peak month sales are expected to reach about 25% of the annual sales, a year-on-year decrease of about 5%. The corn harvest market is mainly concentrated in the second half of the year, and this year's peak monthly sales are expected to reach around 25% of the annual sales, which is basically unchanged compared to the same period last year. In the first and second half of this year, the demand proportion of the large and medium-sized towing market is about 55% and 45%. The peak monthly sales of the previous and next years are expected to show a certain degree of negative growth in a backward trend compared to the same period last year.
2、 The combination of comprehensive factors drives the market stage to fluctuate and bottom out
From a practical perspective, the launch of China's fourth product still faces constraints from various aspects such as user observation, quality improvement, job recognition, and service guarantee. It also faces objective development challenges such as chronological bottoming out, periodic fluctuations, and a groundbreaking rise.

The impact of early overdraft. Due to the impact of the epidemic in the early stage, some farmers chose to work in agriculture, and some purchased agricultural machinery products. This year, the overall situation of epidemic prevention and control in the country is improving, and it has smoothly entered the normalized stage of "Class B and Class B management" prevention and control. Farmers who originally went home to work have started to choose to work outside, reducing or delaying the corresponding demand for purchasing machines. According to incomplete statistics, in 2022, about 40% of potential rigid demand users and about 50% of professional agricultural machinery users, due to concerns about factors such as price hikes and reduced subsidies for National IV products, purchased National III products in advance, overdrawing normal market demand this year. In previous years, some companies carried out significant promotional activities when migrant workers returned to their hometowns for the Chinese New Year. Due to potential customers having already overdrawn in advance and a decrease in migrant workers going out, the promotional activities around the Spring Festival this year did not achieve the expected results.

The impact of wait-and-see factors. Currently, there are still a large number of users who are not familiar with the functions and performance of the fourth national product, and lack basic usage and maintenance skills. Due to some unfavorable factors in the previous upgrade process of products in the second and third countries, existing intended customers have the idea of waiting and taking a look, and have decided to first see the usage effects of other users, which has delayed the purchase time. Some regions have relatively warm weather this year, and the probability of adverse weather conditions such as late spring cold is relatively low. When the stock of products can meet the local demand for mechanized operations, there is rarely a phenomenon of early centralized purchase of machines. This year's Spring Festival is more than 20 days earlier than last year, and according to traditional customs, it should start earlier than last year. Due to the delayed purchase time of existing potential users, combined with the actual situation, it is expected that the spring market sales will show a phenomenon of narrowing the sales curve and delaying the trend.
Constraints on product quality. Some enterprises were initially affected by factors such as the epidemic and their own strength, and the validation time was adjusted or moved back, such as the National Fourth Performance Test, High Temperature and Humidity Plateau Test, Machine and Aftertreatment Reliability Test, and Field Experimental Test. Some companies have shortened the testing cycle and time in order to catch up with the market launch time, and whether these products can meet the quality requirements requires continuous testing of farmland operations. After the product is launched on the market, it can be seen that most of the waist and tail enterprises' national fourth product models have passed the filing review, with only a few or dozens of models, which is several times or even several times different from the top enterprises' national fourth product models. Due to resource constraints in product research and development, manufacturing, and verification, it is difficult to achieve incremental models and insufficient stock models. Some enterprises have weak ability to acquire core components and have not formed a stable cooperative relationship with leading supply chain enterprises. In the short term, there is still significant room for improvement in product manufacturing capabilities and quality assurance levels, making it difficult to restore their original market competitiveness.

The impact of comprehensive costs. Compared to the third national product, users have increased the cost of purchasing, using, and maintaining the product. Due to the general increase of manufacturing costs between 10% and 20% for most of China's fourth tier products, coupled with the continuous decline in subsidies for purchasing and applying agricultural machinery in certain categories of products, the user purchase amount ratio of China's fourth tier products after their launch is generally more than two digits higher than that of China's third tier products. The fourth national product has added devices such as exhaust aftertreatment systems and on-board diagnostic systems, which will increase maintenance costs for users in the event of product failures. The fourth national product requires the addition of CJ-4 grade engine oil, high specification diesel, and the addition of vehicle urea, which increases the user's usage cost. Due to the saturation of regional vehicles and a decrease in operating income, coupled with the relatively low operating costs of the second and third products, the profitability of the fourth product has been relatively reduced, which has extended the overall cost recovery time.

3、 Multidimensional Focused Power Ironing Supply Curve

In the face of market stage adjustments brought about by industrial upgrading, agricultural machinery enterprises should firmly establish strategic determination and development patience. Proactively respond to short-term challenges faced by enterprises, pay attention to addressing symptoms and root causes, as well as short-term and long-term collaborative relationships, and achieve synergy in quality improvement, service improvement, and model innovation.

Comprehensively improve the manufacturing capacity of high-quality products. Once the product is used in bulk, the product quality among enterprises is highly competitive. This requires relevant enterprises to take advantage of product upgrading opportunities and comprehensively implement the optimization and upgrading of manufacturing resources.
Firstly, focusing on the pain points of manufacturing capabilities, we will implement major short board manufacturing equipment special projects, increase investment in intelligent factories and digital workshops, and quickly form manufacturing systems dominated by automated assembly systems, processing centers, and other related technologies. Strive to have equipment resources such as automatic flexible production lines, intelligent control systems, CNC machining centers, and modern coating production lines, and improve the competitiveness of China's fourth national product with high-quality, flexible and intelligent manufacturing technology and quality process assurance capabilities.
Second, improve process quality control, achieve 100% monitoring of Critical to quality parameters and 100% error proofing of key processes. Effectively delve into the fields and fields, carry out the verification of series products, especially focusing on the verification of high-temperature and high humidity plateau areas and user verification. Drawing on the successful experience of mature enterprises, further optimize and improve our own products, and form our own competitive selling points.
The third is to break through supply constraints, blockages, and vulnerabilities, establish a diverse, autonomous, controllable, and high-quality supply chain supply platform, enhance the competitiveness and safety of the industrial chain supply chain, and meet the needs of the serialization manufacturing of the fourth national product.
Continuously building an agile service platform. After large-scale operation, the launch of the fourth national product will inevitably face heavy service demands. Any enterprise needs to play a role in supporting sales, ensuring maintenance, establishing a competitive model dominated by product service systems, and reconstructing and creating an efficient and agile service operation system.
One is to establish and improve service systems and processes, support the efficient integration and smooth operation of enterprise services, dealer services, and social service systems, and conduct process evaluations to form a management loop. Smooth service information, achieve transparency, perception, and scheduling of information, reduce process oriented information silos and blind spots, and ensure timely understanding of product fault status and perception of user needs. Green service channel, dynamically responding to users' maintenance wishes. Implement service commitments to ensure smooth service flow. Establish a service warning mechanism, develop relevant service plans, allocate service resources across regions, and resolve various unpredictable service challenges.
The second is to revitalize service resources and capabilities. Calculate and reserve sufficient service accessories around sales targets. Utilize social and corporate resources to establish sufficient common and vulnerable parts and accessories for the fourth national product, and solve the traditional problem of delayed supply of spare parts during the peak service season in advance. Improve the service network of resident service stations, mobile service vehicles, and operational turnover vehicles in advance, achieving full coverage of fixed and cross regional operational users, ensuring that vehicle users who are difficult to maintain in the short term can use the service turnover vehicles in a timely manner, and minimizing user business profits.
The third is to comprehensively strengthen service training and promotion. Compile and analyze common and difficult maintenance cases of the fourth national product, conduct multi-level training for service personnel, and comprehensively improve their skills. Pay attention to multi-dimensional product training, user test drives, on-site explanations of field operations, and other activities for potential and intended customers. Conduct accompanying "companion" vehicle guidance, improve user driving and maintenance skills, and help customers overcome unfamiliar periods of cognitive impairment.

Fully build a panoramic marketing system. Marketing ability is the first thing to compete when products are launched. Only by continuously promoting the optimization and innovation of enterprise resources, operation ability and marketing mode, and grasping the market demand of single season planting area and spring operation area, can the enterprise achieve the goal of a good start with its own market competitiveness and marketing power.

One is multi-dimensional collaboration of enterprise resources. Smooth the value transmission of the value chain, take the market as the leader, and form a Cross-link and mutually reinforcing operating mechanism for research and development, procurement, manufacturing, marketing, customer relations, product improvement, etc. Respect the intelligence and treatment of all aspects of the marketing chain, especially expert talents, strengthen the construction and control of a comprehensive marketing system, and continuously accumulate product sales advantages.
The second is to enhance abilities from multiple perspectives. Benchmarking leading enterprises, continuously improving their own capabilities by introducing and integrating advanced marketing models and high-end marketing talents in the industry. Innovative marketing chain construction, emphasizing innovation in marketing management, promoting digital management and information empowerment of marketing business, and continuously activating marketing resources. Utilizing digital intelligence technology to achieve synchronous development online and offline, providing a complete set of agricultural equipment demand solutions for end users.
The third is the promotion of multiple sales models. Promote a high degree of collaboration between online and offline marketing, accelerate the optimization and layout of global marketing chains, and comprehensively improve the marketing level of enterprises. Carry out new business models such as refined promotion, precise marketing, and online support services, change the traditional template and business offline promotion, and lock in customer intentions and needs ahead of competitors. Actively carry out short videos, live broadcasts, and other promotional activities to promote corporate products, conduct comprehensive promotions, and maintain product maintenance skills, continuously increasing customer stickiness and increasing product sales share.
The survival of the fittest in the market is an unchanging iron law, and opportunities for industrial upgrading are destined to be left to powerful enterprises. The product that meets user satisfaction only has the foundation for development, and the competitive advantage of products that do not meet the requirements will continue to shrink. This requires enterprises committed to development to adhere to management within the factory, integrate resources within and outside the industry, accelerate breakthroughs in weak links of development, and provide differentiated high-quality products with high cost-effectiveness; Taking the opportunity of strengthening customer relationship building externally, utilizing online and offline platforms to increase brand building, product, and after-sales assurance image promotion, targeting and attracting potential customers in advance, and striving to achieve the company's market development goals.