In March 2025, the construction machinery industry will usher in the traditional peak season for working and sales. With increasing policy support and gradual funding for infrastructure projects, coupled with a mild recovery in overseas markets, the industry is showing significant spring restlessness characteristics. Data shows that domestic excavator sales in the first quarter of 2025 are expected to exceed expectations. Coupled with the recovery of production capacity utilization and the release of profit elasticity, the industry has entered an upward cycle of internal and external demand resonance.
1, Spring season and policy driven demand recovery
Seasonal need sets the tone for demand
The period from March to April in previous years is the peak of construction machinery needs. the operating hours of Komatsu excavator in China show that this period is the highest point of the year. The domestic excavator sales in the first quarter of 2021-2024 accounted for 41%, 34%, 32%, and 26% of the total year, respectively. Although the proportion has been decreasing year by year, Q1 sales still set the trend for the whole year. The pace of resuming work will accelerate after the Spring Festival in 2025, and policies will be intensively introduced after the National People's Congress and the Chinese Political Consultative Conference, further promoting the release of equipment procurement demand.
The domestic market shows a trend of bottoming out and rebounding
In January 2025, the year-on-year decline in domestic excavator sales narrowed to -0.3%. Although affected by the Spring Festival holiday, the performance was better than the same period in history. Komatsu's domestic operating hours in January were 66.2, a year-on-year decrease of 17.3%, but higher than the level of previous Spring Festival months. Institutions predict that under the low-base effect in February 2024, the year-on-year growth rate of domestic excavator sales in February 2025 may reach 20%. In the long run, this cycle is expected to reach its peak in 2028, and the domestic sales scale is expected to increase from 100000 units in 2024 to 250000 units, with a potential growth space of 150%.
The export market continues to experience a moderate recovery
Overseas markets have become an important growth pole. In January 2025, the export sales of excavators increased by 2.2% year-on-year, continuing the trend of recovery since the second half of 2024. Due to the low export base in the first half of 2024 and the low export pressure in the first half of 2025, combined with policy support such as the Belt and Road, the predictability of overseas demand is enhanced, further providing incremental space for the industry.
2, Capacity utilization improvement and profit elasticity release
Capacity utilization repair drives cost optimization
The industry capacity utilization rate has gradually rebounded from a low of 40% in 2024 and is expected to recover to 60% by 2025. In the previous cycle, the gross profit margin of Sany Heavy Industry excavator increased from 28% in 2015 to 39% in 2019, driven by the scale effect brought by the increase in capacity utilization. Under the background of industry recovery in 2025, the dilution of fixed costs will significantly improve the profitability of enterprises.
Excavator contributes to core profits
As the category with the highest technical barriers and gross profit margin in construction machinery, excavator revenue accounts for over 40% of the total revenue of top enterprises. Under the resonance of domestic and international markets in 2025, the growth of excavator sales will directly drive the profit elasticity of enterprises. Taking Sany Heavy Industry as an example, its historical gross profit margin improvement path shows that for every 10 percentage points increase in capacity utilization, the gross profit margin may increase by 2-3 percentage points.
Upgrading policies and standards promote industrial transformation
Domestic policies continue to guide the industry towards electrification and intelligence transformation. Since 2024, 20 new national standards for construction machinery have been released, covering areas such as equipment energy efficiency and safety regulations, promoting the standardization process of the industry. In addition, the equipment renewal policy accelerates the replacement of old machinery, further unleashing the demand for stock renewal and providing support for the industry's medium and long-term growth.