[Industry Trends] Korean Construction Equipment Industry Trends for 2020

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Date 2021.03.18 Writer 관리자
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Korean Construction Equipment Industry Trends for 2020



 I. Sales trends analysis



Domestic sales rose by 5.5% from last year boosted by aggressive marketing of new vehicles and strong export of used equipment


 

The number of complete heavy construction equipment manufactured and released in Korea in 2020 was declined by 10.1% and 11.9% from last year with 74,556 and 76,285 units, respectively.

 

Specifically, the 2020 production of complete vehicles showed a poor record by falling short of 80,000 units in 4 years since 2016 due to the sharp drop of overseas demands caused by COVID-19, and which rebounded after reaching the lowest since 2009 when the production declined sharply to 44,060 units due to the global financial crisis.

 

Although the domestic sales stood firm by showing typical patterns of high sales in the first half and low sales in the latter, exports stumbled with the record low results in the 2nd/3rd quarter that were comparable to those of financial crisis. However, export records recovered gradually during the 4th quarter as the sluggish overseas sales bounced back.


The number of construction equipment released in Korea in 2020 rose by 5.5% from last year by recording 25,582 units in total. It is considered that such increase of domestic sales was the result of efforts by the industry to compensate the loss from overseas sales due to COVID-19 and the upswing in export of used construction equipment. 

 

In reality, domestic construction equipment manufacturers were scrambled to release eco-friendly, high-efficiency products in response to strengthening regulations for GHG emissions and aggressively promoted them during the year. As for the export of used equipment, the nation’s export to Vietnam, which accounted for 85% of its used excavator export, maintained the growth momentum despite the impact of COVID-19, contributing to making up for the loss. For instance, the 2020 export of used excavator to Vietnam increased 10.0% compared to last year with USD 550 million.

 

Yet, the domestic sales of last year showed a limited growth as demands for heavy machinery continued to decrease, although the sales of light construction equipment for repair and maintenance relatively rose in 2020 thanks to the government that allocated its budget for national programs focusing on SOC to reinforce infrastructure to support for daily lives of citizens and green new deal projects.     

 

For example, the sales of less than 4-ton mini excavators and 5.5-ton excavators increased by 47.4% and 11.9% from last year with 311 and 4,070 units, respectively. However, the sales of 30-ton excavators decreased by 14.3% with 950 units, indicating a stark difference. In the meantime, skid steer loaders that are considered as one of representative compact equipment sold 243 units by recording a 47.3% decline from last year. However, the sales of wheel loaders that are widely used in public works along with large excavators dropped by 12.2% with 216 units, and such results are closely related to the boom of front industry centering on small construction projects.    

 

Meanwhile, the domestic sales of forklifts showed a similar performance from last year as it declined by 0.2% with 15,730 units. After recording sales decrease for two consecutive years in 2018 and 2019, forklift sales declined by 3.1% in the first half due to sluggish exports affected by COVID-19 and poor factory operating rate, but it recovered gradually during the second half. With regard to the forklift sales status by driving system, the sales of diesel-powered forklifts and ones with electric motor rose by 6.0% and 7.1% from last year with 7,953 and 7,683 units, respectively. However, the sales of LPG-powered forklifts decreased by 25.4% with 94 units.  

 

In addition, domestic sales of concrete pump rose by 14.0% with 196 units, finally recovering from constant sales reduction that lasted for 4 years from 2016 to 2019. However, it is still struggling from the ripple effect of supply and demand adjustment as seen from the fact that the 2020 sales remained in the range of 30% from the peak point recorded in 2015. In the meantime, the drilling machinery sales declined by 36.4% compared to last year with 28 units.

 

 

 

 


Overseas sales of complete products hit the bottom since 2016 due to sluggish demand with the impact of COVID-19


In 2020, overseas sales of complete products dropped by 18.7% from last year with 50,703 units recording a decrease for 2-straight years, and which was the lowest since 2016 (with 47,805 units).


The global demand for complete construction equipment has shrunken greatly with the impact of COVID-19. In particular, the export dropped significantly during the period of April and August due to the demand cliff of which implications were comparable to that of global financial crisis. However, the export began to increase again since September, 2020.

 

 


 

As for key regions of the construction equipment export partners in 2020, Europe has recorded the largest export amount, followed by the North America, Asia (excluding China), China, Middle East, Latin America, Oceania, and Africa. 


With regard to the rate of export increase by region, there were double-digit declines in most regions excluding China (11.3%) and North America (21.0%) showed the biggest drop, followed by Latin America (26.2%), Africa (25.4%), Europe (16.2%), Asia (19.2%), China (16.5%), and Oceania (2.7%).   


  * Source: Korea International Trade Association (KITA, based on MTI Code 725 export values)


 
As for the export of construction equipment by region, the export to Europe declined for 2 straight years. For instance, the export to Europe in 2020 declined by 16.2% from last year with USD 1.38 billion, accounting for 26.7% of the total. Particularly, the export to EU decreased by 29.4% YoY with USD 867 million, but the export to non-EU countries rose by 32.4% with USD 441 million. The amount of excavator export to Europe was USD 749 million or a 15.2% decline from last year, and the amount of forklift was USD 120 million or a 21.6% decline.


The amount of export to North America was USD 109.5 million or a 21.0% decline from last year, and it accounted for 22.3% of the total export. The excavator export to the region declined by 28.4% with USD 319 million, and forklift export dropped by 30.2% with USD 216 million.  

 


The amount of export to Asian countries (excluding China) decreased to USD 103.7 million or 19.2%, accounting for 21.1% of the total. In particular, the amount of export to Japan declined by 24.1 with USD 234 million, and export to India decreased by 10.1% or USD 166 million. The amount of export to 10 ASEAN member countries declined by 21.1% with USD 340 million: the amount of export to Vietnam and the Philippines declined by 0.5% and 15.5% with USD 125 million and USD 680 million, respectively, and the amount of export to Myanmar rose to 73.3% with USD 750 million.   


The amount of export rose by 11.3% from last year with USD 672 million and which accounted for 13.7% of the total. The 2020 sales of excavator in China were 292,310 units, recording a 40.0% increase. Among them, the sales of excavator manufactured by Korean companies were 26,483 units or 17.5% increase from last year.

 

As for the Middle East, export to the region declined by 16.5% to record USD 360 million, accounting for 6.2% of the total global export. In general, export to Middle East has declined for 6-straight years since 2015. Specifically, export to Saudi Arabia declined by 19.1% with USD 770 million, and which occupied 25.2% of the total export to the region. Additionally, the amount of export to Algeria was USD 340 million or a 43.2% decline YoY, and amount of export to UAE was USD 330 million or an increase of 10.2%.


The amount of export to Latin America stood at USD 240 million and declined 26.2% from last year, accounting for 4.2% of the total global export. The amount of export to Brazil, Peru, and Chile recorded USD 69 million, USD 20 million, and 19 million or a decline of 17.6%, 36.3%, and 54.6%, respectively.

 

The amount of export to Oceania was USD 174 million and dropped 2.7% from last year, and which amounted to 3.5% of the total export. Among them, export to Australia rose by 4.4% with USD 115 million.


The amount of export to Africa dropped by 25.4% with USD 110 million, accounting for 2.3% of the total. Export to South African Republic, which accounted for 39% of the total export to the region, recorded USD 420 million or 26.6% decline.


According to Korea Customs Service (KCS), the total amount of construction equipment export in 2020 was USD 4.97 billion and which declined by 15.5% compared to last year. The amount of import was USD 851 million and decreased by 9.1%, and the amount of trade balance recorded a surplus with USD 4.056 billion, but declined by 16.7 from last year.

 

 * Source: KITA (based on MTI Code 725 export values)


 

 


II. Production/sales status by item

 


1. Excavators

* Source: KOCEMA

 

The total number of excavators manufactured in 2020 was 31,887 and it declined by 7.1% from last year

   - Among them, the production of mini excavators < 6 tons rose by 16.4% with 8,936 units

Domestic sales of excavators in 2020 rose by 18.2% with 8,540 units

  - Domestic sales of mini excavators < 6 tons increased by 24.5% with 4,790 units

The number of excavators exported in 2020 was 23,515 and declined by 14.4%

   - The amount of export of mini excavators < 6 tons increased by 4.3% with 4,076 units


    A. Crawler excavators

     * The number of crawler excavators produced and sold was 25,445 and 25,622 and declined by 9.8% and 9.8% for each

     * Among them, the number of crawler excavators sold in Korea and exported overseas was 5,057 and 20,565, and increased by 18.9% and decreased by 14.8% from last year, respectively

     * ​The number of mini crawler excavators (< 6 tons) manufactured and sold for the year was 6,978 and 6,982 and declined by 16.6% and 15.8% from last year, for each

      * The number of mini crawler excavators (< 6 tons) sold in Korea and exported overseas was 3,526 and 3,456 and increased by 26.5% and 6.6%, respectively

     * As for the domestic sales, 5.5-ton and 30-ton crawler excavators sold the most with 2,806 and 770 units, and they recorded an increase of 8.9% and 7.3%, respectively

       - These two types of crawler excavators accounted for 55.5% and 15.2% of domestic market, for each. Their shares declined by 5.1%P and 4.3%P, respectively.

     * As for the export, 22-ton, 30-ton, and 5-ton crawler excavators sold the most in overseas with 3,009, 1,104, and 1,059 units, and they recorded a decline of 47.5%, 42.9%, and 58.8%, respectively

       - These three types of crawler excavators accounted for 14.6%, 5.4%, and 5.1% of global export, for each. Their shares declined by 9.1%P, 2.6%P, and 5.6%P from last year, respectively

       - With regard to the share of crawler excavator export by region, China accounts for the largest share with 32.6% of the total, followed by Europe 30.3%, Latin America 12.2%, North America 8.7%, Africa 4.8%, Asia 3.9%, Middle East 3.6%, and Oceania 2.5%


* Source: KOCEMA 

Note) Based on the shipping amount of new products

 

      B. Wheel excavators

     * The number of wheel excavators produced and sold was 6,442 and 6,442 and declined by 5.6% and 2.2% for each

     * Among them, the number of wheel excavators sold in Korea and exported overseas was 3,483 and 2,950, and increased by 17.4% and decreased by 11.3% from last year, respectively 

     * The number of mini wheel excavators (< 6 tons) manufactured and sold for the year was 1,958 and 1,884 and declined by 15.9% and 9.0% from last year, for each

     * The number of mini wheel excavators (< 6 tons) sold in Korea and exported overseas was 1,264 and 620 and increased by 19.3% and 7.2%, respectively

     * As for the domestic sales, 14-ton and 5.5ton crawler excavators sold the most with 2,004 and 1,264 units, and they recorded an increase of 18.4% and 19.3%, respectively

       - These two types of wheel excavators accounted for 57.5% and 36.3% of domestic market, for each. Their shares increased by 0.5%P and 0.6%P, respectively 

     * As for the export, 21-ton and 14-ton wheel excavators sold the most in overseas with 798 and 681 units, and they recorded an increase of 2.6% and decline of 33.5%, respectively

       - These two types of wheel excavators accounted for 27.1% and 23.1% of global export, for each. Their shares rose by 3.7%P, and declined by 33.9%P from last year, respectively 

     * With regard to the share of wheel excavator export by region, Europe accounts for the largest share with 52.9% of the total, followed by China (24.1%), Asia (9.5%), Middle East (7.8%), Africa (2.3%), North America (0.7%), and etc. (2.7%)