According to the statistics of major excavator manufacturers by the China Construction Machinery Industry Association: In February 2025, 19,270 excavators of various types were sold, a year-on-year increase of 52.8%, of which 11,640 were sold domestically, a year-on-year increase of 99.4%. From January to February, a total of 31,782 excavators were sold, a year-on-year increase of 27.2%, of which 17,045 were sold domestically, a year-on-year increase of 51.4%, and 14,737 were exported, a year-on-year increase of 7.4%.

Once such eye-catching data was released, the industry exclaimed! "Excavator sales will soar in 2025" and "Spring has come to the construction machinery industry again"!

Objectively speaking, the increase in domestic sales from January to February only continued the growth trend in the second half of 2024 (an increase of 21%), which is still a large gap compared with the sales of 25,000 units during the epidemic period in 2022. At the same time, the construction of projects in January and February over the years has been greatly affected by the Spring Festival holiday, and subsequent market changes remain to be observed.

In fact, the sales data at the beginning of 2025 is indeed a bit watered down compared with previous years. First, the number of dealers who bought out machines at the end of 2024 was less than in previous years, and they were more willing to prepare for the new year (or under pressure from the OEM); second, after the beginning of the year, several domestic brands began to vigorously promote dealers to carry out leasing business, and "hundreds of vehicles shipped" and "a certain leasing customer signed orders for dozens of vehicles" appeared one after another on the self-media!

From the domestic sales data of excavators in 2024, the domestic sales of excavators did rebound significantly (100,500 units sold in 2024, a year-on-year increase of 11.7%), but the market demand did not improve significantly (the newly started area in 2024 fell by 23.0%, and the infrastructure investment increased by 4.4%, lower than 2023).

Some media predict that the growth rate of national fixed asset investment in January and February will be the same as last year. Among them, the resumption of construction of infrastructure projects is slow.

The year-on-year sales area of ​​commercial housing in 30 large and medium-sized cities in January and February was only 2.0% after adjusting for the impact of the Spring Festival, and the decline in new and second-hand housing prices narrowed slightly. The land transaction area in 300 cities in January and February was -26.0% year-on-year after adjusting for the impact of the Spring Festival, which was a further decline compared with -13.3% in December last year.

According to the survey data of Centennial Construction Network, the project resumption rates on February 6/13/20 were 7.4%, 23.5% and 47.7% respectively, all lower than the same period of the previous lunar calendar.

Combined with my recent visits to some commercial concrete station customers in Guangzhou and Shenzhen, most of them reported that there were very few new projects this year. Obviously, the main driving force for the domestic excavator sales to stop falling and rise this time is not a significant improvement in the demand side.

Excavators and other construction machinery have different time regularities for the renewal cycle of old equipment. The upward cycle that began in 2016 was driven by the demand for renewal and replacement, coupled with the stimulus of monetization of shantytown renovation and other factors.

Unlike the replacement cycle that started in 2016, the number of small excavators and domestic brands has risen sharply (small excavators exceed 50.0%, domestic brands exceed 70.0%), and policy intervention is stronger (National IV switch + new energy + large-scale equipment update).

Since the small excavator has a shorter update period, the internal price war in recent years has greatly affected the quality of excavators. The reduction of low quality and the pressure of policy update have greatly compressed the replacement cycle of old construction machinery equipment.

In short, this round of excavator sales surge is completely different from the upward cycle that started in 2016. It is due to the policy-led update cycle of old equipment in the stock market where the demand side has not improved.

Recently, I communicated with friends in the industry. Many colleagues generally felt that the market at the beginning of the year was lower than last year. I think this is related to the deep structural differentiation of the regional market and the recent changes in the industry.

Judging from the changes in excavator sales data after 2021, the excavator market is undergoing a huge structural change.

1. The proportion and sales of small equipment continue to rise. From 2021 to 2024, the proportion of small excavators was 59.0%, 64.0%, 69.0% and 75.0% respectively. In January 2025, the domestic sales of small excavators accounted for 77.0%. At the same time, the domestic sales of small excavators in 2024 reached 73,800 units, a year-on-year increase of 21.0%, driving the overall sales of excavators to rebound by 11.7% (in 2024, the domestic sales of medium and large excavators still fell by 8.0% and 7.0%).

This change is not only due to the arrival of the small excavator replacement cycle (5 to 7 years), but also the deeper factor is the growing demand for diversified applications of small equipment to replace manual labor.

From the market perspective, although the real estate market continued to decline in 2024, and the progress of medium and large infrastructure projects was affected by debt repayment, the market demand for electricity, heat, gas, water supply and drainage in projects such as agriculture, rural areas and water conservancy, urban renewal, and renovation of old communities has increased significantly. Coupled with the aging trend of construction workers, the market demand for small equipment is much higher than that of medium and large excavators.

This can be seen from the sales volume of wheel excavators in 2024 (11,200 units, a year-on-year increase of 17.0%), as well as the continued popularity of tooling accessories in recent years (most of which are installed on models below 18 tons).

Obviously, the application end of small excavation equipment (including small excavators, micro excavators and wheel excavators, etc.) is becoming more and more extensive, and the relevance to real estate, medium and large infrastructure, mining and quarrying is getting lower and lower. It can be said that small excavators are increasingly becoming weak-cycle products under the configuration of multi-application accessories, and are still incremental markets in some subdivided application fields.

2. The market differences in various regions are accelerating and deepening. This is not only due to the continued differentiation of the real estate market in various places, but also related to the influence of factors such as economic development, population absorption, and policy differences in various provinces.

From the changes in excavator sales in various provinces in 2024, Hebei and Guangxi both sold more than 5,000 units, jumping from the 16th and 15th in 2023 to the 4th and 5th respectively. The original sales-rich provinces of Shandong and Zhejiang fell from the 5th and 6th in 2023 to the 10th and 14th.

At the same time, in 2024, only Zhejiang (down 11.2%), Jiangsu (down 6.9%) and Inner Mongolia (down 5.0%) had negative sales growth.

The above regional market changes are obviously related to factors such as local debt (Shandong and Inner Mongolia), sluggish real estate (Jiangsu and Zhejiang), policy-driven (Hebei new energy) and mining industry growth (Guangxi, Yunnan, Xinjiang).

This means that the factors affecting market development in various provinces and regions are more complex, and structural differences are deepening, which poses greater challenges to the operation and management of major OEMs and their dealers.

3. Excavator distribution channels are undergoing changes. In 2024, a leading domestic brand will continue to transform its direct sales company into a social distributor (transforming the original direct company's professional executives into joint-stock partners); while another domestic brand that has always adhered to the "end-to-end" direct sales channel has begun to recruit channel distributors on a large scale.

According to data from Today's Engineering Machinery Think Tank, as of the fourth quarter of 2024, 64.0% of excavator dealers are still in the red, and only less than 1.0% of dealers have a gross profit margin of more than 15.0%. Nearly half of the dealers need subsidies from the OEM to ensure normal operations.

In recent years, although the excavator distribution channels have been continuously cleared and integrated, and the operating conditions have improved slightly, it is still difficult to sustain. With the continuous evolution of internal and external markets (especially the decline in export sales of OEMs), the distribution channel transformation from pursuing market share to profit and cash flow will intensify the deep transformation.

4. The circulation of second-hand machines in overseas markets has accelerated. Since 2022, not only the export of domestic new machines has benefited from the epidemic prevention, but also the export sales of a large number of domestic second-hand machines have continued to rise. Some media estimated that my country's second-hand construction machinery exports will exceed 300,000 units from 2021 to 2024.

It is reported that in 2024, my country's second-hand excavator export sales will exceed domestic new machine sales for the first time. Obviously, my country is gradually replacing Japan and other countries to become the largest importer of second-hand construction machinery in emerging markets such as Southeast Asia, South America, and Africa. This undoubtedly greatly eased the supply and demand relationship in the domestic leasing market (especially medium and large excavators) and further stimulated the demand for new machines in the domestic market.

At the beginning of 2025, a local dealer of a domestic brand began to promote the excavator sharing model (sublease), and a domestic brand vigorously promoted the recruitment of new agents to carry out operating leasing business. I think this is an attempt by the OEM to open up a new marketing model of domestic leasing + (2~3 years of fine products) second-hand exports.

In summary, we are cautiously optimistic about the surge in excavator sales in January and February, but we must also be deeply aware that the excavator market is undergoing tremendous changes.

At the same time, we must also rationally realize that the excavator, which is known as the "barometer" of engineering machinery, is unlikely to drive the bottoming out and rebound of other engineering machinery product markets in this round of warming trend.

According to relevant media data, the production capacity of Hengli excavator cylinders in January and February fell by 6.0% year-on-year due to the drag of small excavators (presumably due to the high inventory of small excavators of the main engine manufacturers and dealers), while the production capacity of medium and large excavator cylinders increased by 10.0% and 40.0% year-on-year.

In March, the production plan of hydraulic valves for medium and large excavators increased by more than 50.0% year-on-year. The production of hydraulic cylinders increased by 17.0% year-on-year, of which the production of small excavator cylinders turned positive year-on-year, and the production of medium and large excavator cylinders increased by 35.0% year-on-year. Judging from the above Hengli hydraulic production data, excavator sales will increase significantly from March to June this year.

Looking forward to the excavator market in 2025: With the continued stabilization of real estate, the acceleration of investment in infrastructure and mining industries, and the in-depth efforts of large-scale equipment renewal policies, as well as the continued rise in demand for small excavators in the renewal cycle (about 310,000 small excavators in 5-7 years), the continued enhancement of the weak-cycle product attributes of diversified alternative manual applications, and the internal driving forces such as the growth of second-hand medium and large excavators to stimulate domestic demand: In 2025, domestic excavator sales will continue to maintain an increase of more than 35.0%, with the characteristics of "small excavators increasing by more than 30.0%, medium excavators continuing to narrow and expected to turn positive, and large excavators bottoming out and rebounding", and it is expected that domestic sales may exceed 140,000 units throughout the year.

In addition, 37 electric excavators were sold in January-February, a year-on-year increase of 164.0%. Will the electric excavator market explode like electric loaders? When will it explode? It is also worth our close attention!

In short, for colleagues in the excavator industry: 2025 is worth looking forward to! Grasp the direction and grasp the time! Encourage everyone!