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Construction machinery industry or usher in rising prices
The construction machinery industry is witnessing a growing trend of price increases, driven by factors such as rising production costs, stricter environmental regulations, and increasing downstream demand. Major players like Sany Heavy Industry and Komatsu have already started adjusting their pricing strategies, signaling a potential wave of price hikes across the sector in 2018.
In December 2017, Komatsu China announced that all its models would see a price increase starting January 1, 2018. Earlier that year, several companies, including Guangxi Liugong Machinery, Shantui Construction Machinery, and Xuzhou Construction Machinery (Xugong), collectively raised loader prices by between 10,000 and 20,000 yuan. While Caterpillar stated that its current product prices remain stable, it noted that its next-generation excavators feature improved technology and are priced competitively.
Sany Heavy Industry dealers reported a 3% price hike for excavators in January 2018, while Liugong Machinery claimed it had not yet received official price increase notices. Analysts at Tianfeng Securities predict that major domestic manufacturers may follow Komatsu’s lead, with an average increase of around 10%, particularly for large and medium-sized excavators.
Yin Xiaoji, deputy secretary-general of the China Construction Machinery Industry Association, emphasized that the price rise is a natural response to rising costs, environmental policies, and strong market demand. He also pointed out that the steel price surge since 2016 has played a key role, with steel prices climbing over 1,000 yuan in just two months in late 2017.
Environmental regulations have led to the closure of many non-compliant foundries and factories, further driving up material costs. At the same time, the downstream construction market has seen a sharp recovery after years of decline. According to data from the China Construction Machinery Industry Association, excavation machinery production surged by 99.5% in 2017, marking one of the highest growth rates in recent years.
Analysts believe that while price increases are likely, they will be more strategic than widespread. Soochow Securities noted that this is a structural adjustment rather than a broad-based price hike, with certain segments like concrete pumps and cranes having more pricing power. However, companies with lower profit margins, such as those producing loaders and road machinery, may be more inclined to raise prices.
Despite these trends, some industry experts suggest that a full-scale price war is unlikely. Komatsu’s move may not trigger a mass price increase across the sector, as many manufacturers are still absorbing rising costs without passing them on to customers. As the market continues to recover, the focus will likely shift toward product innovation and efficiency improvements rather than aggressive price adjustments.