In the past five years, the demand for construction machinery in Türkiye has increased significantly, and Chinese manufacturers have become the main beneficiaries of this trend.
According to the latest report of Off Highway Research, a professional management consulting company, Türkiye's construction machinery market has experienced significant growth. The report was released in September, recording that the sales of construction machinery in Türkiye surged from 3328 units in 2019 to 18889 units last year, a record high.
The sharp increase in sales volume is due to the rebound after the difficult economic and political environment from 2018 to 2019, as well as the large-scale recovery and reconstruction work caused by the devastating earthquakes in Türkiye and Syria last year. The earthquake on February 6, 2023 resulted in over 50000 deaths, approximately 1.9 million homes destroyed, and over 3 million people displaced.
Although the prospect of raising approximately $81.5 billion to support disaster areas and national recovery remains uncertain, the recovery efforts still led to a 7.8% growth in the construction industry last year.
Significant increase in sales volume
The main growth in new equipment sales is concentrated in three categories: crawler excavators, excavator loaders, and small excavators.
The report points out that from 2019 to 2023, sales of excavator loaders increased by 424%, small excavators increased by 554%, and crawler excavators had the largest growth rate, reaching 746%. The overall equipment sales volume increased by 468%.
However, the rapid growth in these years also reflects the volatility of Türkiye's construction machinery market.
The report shows that the sales volume reached its peak of 12500 units in 2013, but suffered a heavy blow between 2018 and 2019, reaching its lowest point five years ago. Sales declined by 40% in 2018, halved again in 2019, but quickly rebounded between 2019 and 2023, growing by 468%. The abnormally low sales level has led to a shortage of machines, and many equipment owners have to sell their existing equipment to make a living. During this period, up to 50000 machines were sold, with the majority of them being shipped abroad. Chinese companies have seized the suppressed demand in this market environment, creating conditions for a surge in demand, and Chinese manufacturers, whose domestic market sales have sharply declined since 2022, have seized this opportunity. In Türkiye, Chinese enterprises have found a market that has an urgent demand for equipment but cannot be met by existing suppliers. Due to the rapid growth of other markets and post epidemic supply chain challenges, customers in Türkiye are more likely to purchase Stage IIIB standard equipment before transitioning to more expensive Stage V standard equipment in March 2023. This situation has led to low sales of new devices and a significant reduction in the number of existing devices, "said Paul Howard, consultant and report author for Off Highway Research. Since then, the economic environment has improved and political stability has recovered. The market has grown significantly in the past five years, but unfortunately, the earthquake at the beginning of last year further boosted demand. Crawler excavators have seen the most significant growth in the past five years, with models with operating weights of 19 tons or more being the most popular. In addition, sales of small excavators have also grown rapidly. Howard explained that in the past, due to the relatively low labor costs, small excavators were difficult to gain a foothold in the Türkiye market, but the more competitive equipment from China changed this situation.
In recent years, it is estimated that all excavators needed globally can be produced in factories of Chinese manufacturers, "Howard said. "Therefore, in the case of declining domestic demand, Chinese manufacturers need to develop overseas markets to maintain their huge production capacity." He also pointed out that Chinese enterprises began to realize the opportunities in the Türkiye market from 2019, which coincided with the establishment of distribution networks and the surge in demand. During this period, China's equipment supply increased, while international suppliers were limited by strong demand from other markets and supply chain issues after the pandemic. Backhoe loader still plays an important role Although crawler excavator has surpassed backhoe loader in sales, the latter is still an important equipment category in Türkiye market. Howard pointed out that the growth of tracked excavators is a supplement to excavator loaders, rather than a direct replacement. With the further development of Türkiye's economy, the sales of backhoe loaders may gradually decline, but this process is expected to be slow. Looking ahead, Off Highway Research predicts that sales volume will drop to approximately 15000 units in 2024, below the peak of 2023. However, considering the "significant uncertainty" brought about by market volatility, the report predicts that annual sales will remain above 15000 units in the next five years (until 2028).