2017年上半年拖拉机市场分析（英）

An Interpretation of the Tractor Market in the First Half of 2017

To our amazement, changes and abnormalities are found in the tractor market in the first half of 2017, during which the domestic market experienced a downturn, while efficiency indicators rose steadily, leading brands had a slump in sales while marginal brands rose sharply, and domestic market saw a moderate downturn while export market made an unexpected achievement…

The insiders get confused about the complex situation. What exactly happed in the tractor market in the first half? We are now trying to recover the tractor market in the first half.

With a slight drop in sales, the market is sluggish

Statistics show that 176 tractor manufacturers above designated sizehave accumulativelyachieved the main business income and the profit of 34.495 billion yuan and 1.213 billion yuan separately in the first half of 2017, with year-on-year growth of 8.66% and 2.74%, respectively.

The main business income increased, but the tractor sales have shown a decline, resulting in the overall market downturn.Market survey shows that China’s total sale of various types of tractors reached 799800, with year-on-year decrease of 8.21%. Among which, the sales of large tractors, medium tractors and small tractors reached 36900, 228000 and 534900, respectively, with year-on-year decrease of 12.35%, 6.75% and 8.52%.

Seeing from China’s large and medium-sized tractor market, the large and medium-sized tractor market continued to decline slightly in the first half.From April 2016 to April 2017, the month-on-month growth of the large and medium-sized tractor market lingered inglide path for 13 consecutive months, which is rarely seen over the years.

Monthly Sales Trend of Large and Medium-sized Tractor Market from January 2016 to June 2017

Structural adjustment, medium tractor rises in market share

In the first half, the demand structure of power section has been adjusted greatly in the large and medium-sized tractor market, showing an outstanding feature that the middle power section is ‘prominent’and shows a good growth trend.

The market demand fortractors within the medium horsepower section is concentrated in 36.8~58.8 kW (50~80 hp).Market surveyshows that the section of 18.4~36.8kW (25~50hp) and the section of 58.8~73.5kW (80~100hp) see a decline to different extents on year-on-year basis, while the section of 36.8~58.8kW (50~80hp) shows a greater increase, making it a model type of medium tractors.

It is obvious that the power section of large horsepower tractors expands upward. The section of 80.9~102.9kW (110~140hp) sees a significant decline to different extents, while that of 102.9~132.3kW (140~180hp) shows a significant increase to different extents, especially the tractors within the section of 110.3~117.6kW (150~160hp) achieve a three-digit year-on-year growth.However, the upward extending of large tractors stops at the section of 132.3kW (180hp), and the models above sections of 132.3~147.0kW (180~200hp) and 147kW (200hp) show a decline to different extents on year-on-year basis.

Seeing from the perspective of market share, large tractors within sections of 73.5~80.9kW (100~110hp) and 95.6~102.9kW (130~140hp) become the leading models, accounting for 43.72%, with a decrease of 5.06percentage pointscompared with the same period of 2016; while the market share of the section of 102.9~117.6kW (140~160hp) shows a rapid growth, with an increase of 7.02 and 7.35 percentage points, respectively.

Regional concentration is improved, marginal market quietly rises up

In the first half of 2017, the regional market performance was characterized by an increase in regional concentration.Market survey shows that there are 11 regions with sales of more than 10000 units and the cumulative sales of 173200 units, accounting for 65.38% of the total, with an increase of 2.12percentage pointscompared with the same period of 2016.

From the perspective of case analysis in mainstream regions, the 11 mainstream regions show a trend of ‘7 up and 4 down’, of which Shangdong, Gansu, Hubei and Jiangxi show a two-digit increase on year-on-year basis, and the regional share also shows a uptrend to different extents; while traditional regions with strong demand show a sharp fall, such as Inner Mongolia, Hebei and Henan, etc.It thus can be seen that the increment of market demand for large and medium-sized tractors has reduced year by year with the saturation of the traditional regions with strong demand and restructuring, while that of some marginal regions remains strong year by year due to the rigid demand.

Regional Sales of Large and Medium-sized Tractors in 2017

Competition pattern Changes, marginal enterprises subdivide the market rapidly

In the first half of 2017, the competition concentration of large and medium-sized tractor market decreased obviously.Market survey shows that the top 5 brands achieved the cumulative sales of 100900 units, with a sharp year-on-year decline of 27.58%; and the market share is 38.08%, with a decrease of 10.5percentage pointscompared with the same period of 2016.Among the top 5 brands, known as ‘three-in-hand’”,YTO, LOVOL and DFAM saw a decline of more than 30%. On the contrary, John Deere showed a sharp rise in year-on-year growth of up to 25.88%, whose market share was increased by 1.07percentage points.

It is not hard to see that powerful brand ‘slumped’in sales, which may probably mean that the stable competition pattern for large and medium-sized tractors which has been maintained for years is facing great challenges.

The double pressures have become an important cause for such change.On the one hand, the competitiveness of foreign brands is gradually brought into play, and they are overcoming the market sales downturn caused due to years of high price, so as to further demonstrate their brand quality advantage through localization to eliminate price disadvantage.On the other hand, the encroachment of non-mainstream brands becomes another major factor in triggering the mainstream brand crisis, because they raid the market at a lower price, and such impact would be powerful in the situation of higher price sensitivity at present.

Meanwhile, it is found in the survey in Weifang that these non-mainstream brands are sharply subdividing the market of mainstream brands, during which some small enterprises gained growth against the trend and an enterprise even gained a year-on-year growth of up to 40% in the first half.At the same time, we also find that some low-end enterprises in Kiamuszeachieved good sales performance at a very low price in the absence of subsidies.All in all, the competition of the large and medium-sized tractor market is sharply subdivided in the context of market transformation and upgrading and demand downturn, showing a new competition pattern.

Market Share Tendency of Mainstream Brands in the Large and Medium-sized Tractor Market in the First Half of 2017

Exportsriseall the way

Tractor exports rise all the way, but the export structure is to be further adjusted.

First, exports grow slightly. Statistics show that the cumulative exports of various tractors reached 75979 in the first half, with year-on-year growth of 10.38%.Among them, the exports of wheeled tractors, walking tractor, crawler tractors or motor tractors reached 25146, 50764 and 69with year-on-year growth of 19.27%, 6.35% and 305.83%, respectively. 

Second, the amount of exports rises sharply. The cumulative amount of exports reached 243.141 million US dollars, with a significant year-on-year growth of 33.34%.Among them, the amount of exports of wheeled tractors, walking tractor, crawler tractors or motor tractors reached 200.0368 million US dollars, 42.589 million US dollars and 526300 US dollars, with year-on-year growth of 40.98%, 5.78% and 159.64% respectively.

From the perspective of export destination countries, the regional export concentration increases significantly.Statistics show that the the wheeled tractors are exported mainly to top 15 countries such as the US and Myanmar in the first half, accounting for 72.4%, which is increased by 5.66percentage pointscompared with the same period of 2016.Among the top 15 countries, 12 countries show a year-on-year growth to different extents in terms of exports, and the top 3 countries in exports, namely, the US, Myanmar and Ukraine, see the year-on-year growth of 84.77%, 60.05% and 23.9%, respectively.In addition, Russia reaches a year-on-year growth in exports up to 102.12%, while that of Algeria andUzbekistan rises up to 73.6 times and 11.3 times.

There are some certain reasons for decline or growth

With the rapid advancement of land transfer as well as the rapid rise of agricultural machinery and agricultural cooperatives, major clients of agricultural machinery, family farms, specialized planting households and other rural organizations in recent years, it should be the prime time for rapid development of the large and medium-sized tractor market, especially the large tractor market, but why it declined in the first half of 2017?

First, the market issaturated andthe rigid demand is in severe shortage. China’s tractor market has achieved farming mechanization many years ago after 10 years of rapid development, as a result of which the rigid demand is weakened. Second, agricultural subsidies are tardy. Although the central finance has allocated subsidies to various regions as early as the beginning of the year, it is slowly implemented in many regions. Third, the switch between ‘state II’and “‘state III”’. The switch between ‘state II’and ‘state III’has been completed in December 1, 2016, but it still has a profound impact on the market in the first half of 2017. In 2016, many dealers turned stock tractors with ‘state II’engine into second-hand agricultural machinery through a variety of ways, making an overdraft of the tractor market in the first half of 2017. Fourth, agricultural machinery sees a decline in income.In recent years, tractor investment income shrinks with the increasing rise in tractor population year by year, which suppresses the potential customers’ confidence to buy, producing a greater impact of the market.

Why the tractor benefit indicators show a moderate growth in the context of market decline?

The main reasons are as follows. First is the rise of emerging marginal enterprises. It is found in market survey that the sales performance of some small enterprises keeps increasing in the first half. Second isthe huge difference in brand performance. Other brands increase while some mainstream brands decrease, such as John Deere, Shifeng and other big brands. Third isthe change in sales structure. The increase in market share of large tractors in the tractor structure increases the whole tractor benefit. Fourth, enterprises increase market risk control while reducing the operating costs of enterprises, increasing the benefit contribution to the entire industry.