In-depth analysis of China's tractor industry in the first half of 2010

“The data can speak”. With the “freshly released” data of the agricultural machinery industry in the first half of the year, we are also collecting, arranging, and analyzing the data of the tractor industry for the first time. We hope that through the problems reflected in the data, we can make sense. An objective view of the real operating conditions of the tractor industry in the first half of the year.

First, the market starts late, the project is executed for 20 days

In 2010, the central government plans to allocate 15.5 billion yuan in subsidies for the purchase of farm machinery and equipment, an increase of 2.5 billion yuan over the previous year, and an allocation of 10 billion yuan at the beginning of the year. The subsidy will be expanded to 12 categories, 45 subcategories and 180 items, and the types of subsidies will be expanded to include animal husbandry. The machinery that is in urgent need of industry, forestry, drought and water saving, and modern agricultural development has basically covered all agricultural machinery products. Compared with previous years, the biggest change in the national agricultural machinery purchase subsidies in the first half of this year was the late implementation of the project. This year, the Ministry of Agriculture announced the list of state subsidies on March 10, and changed the subsidy method to use fixed subsidies, liberalized the price of subsidized products, and implemented online registration and manual registration. Due to the adjustment of the subsidy method, provinces began to formulate their own implementation rules for agricultural machinery subsidies in this province, which led to a slow progress in the overall subsidy work. Most provinces can only click and report purchases at the end of April. Most provinces have delayed the start of the project by nearly 2 months from last year. Some areas even missed the spring plowing, and at the end of February 2009, the subsidy for agricultural machinery projects in some provinces has already entered the stage of substantial operation. Only in May began to enter the substantive operation stage, and the implementation period of the project was basically completed in only 20 days. As of June 30, the national agricultural machinery purchase subsidy project has cumulatively implemented 9.352 billion yuan, accounting for approximately 94% of the total funds allocated by the first batch of central government agencies.

Second, manufacturers prepare goods early, large channel inventory

In 2009, the companies increased their production capacity and stockpiling a few months in advance. However, this year's market season has not arrived as expected, and there are only 50,000 units of social sales of large and medium-sized wheeled tow in January-April, and social stocks It has soared to 140,000 units. After entering May, local projects began to enter into a substantive operation stage. During the month, sales reached 60,000 units, more than the sum of the previous four months, social demand was released centrally, and manufacturers’ inventory pressure was higher. Relief, after the implementation of various projects in June came to an end, the month to achieve social sales of 30,000 units. In the first half of the year, 140,000 units were sold. According to the statistics of the shipments of the latest large-scale enterprises in the first half of the year, a total of nearly 200,000 units were issued during the first half of the year, minus 140,000 units, and at least 60,000 channels remained. Taiwan's inventory, which will lay the groundwork for competition in the second half.

Third, the medium and large dragging down is still in decline

Dazhong Tutu has always been the “darling” of agricultural machinery subsidy policy. This year is no exception. From the standpoint of the type of subsidy equipment, power machinery is still a subsidized hot product in all areas. In the first half of the year, there are three categories of power machinery, harvesting machinery, and ploughing machinery. The largest amount of subsidy funds was used, reaching 6.754 billion yuan, accounting for 73.4% of the total subsidy funds. Despite the support of subsidy funds and the support of local governments, the rapid growth in recent years has quickly brought about a huge amount of ownership in various places. In particular, the extraordinary increase in the number of fires in 2009 caused the country to add more than 280,000 units. As a result of the new machine, after entering 2010, there were staged demand saturations in some of the main sales areas under the social ownership of 1.61 million units in medium- and large-scale tugboats. According to incomplete statistics, social sales in the first half of the year were larger than those in the previous year. It fell by 18% to 20%, of which the big wheel dragged down 20% to 23% year-on-year, and the middle wheel dragged down 15%. It can be said that after five years of frantic growth, the domestic medium-to-medium-size wheel drag, especially the large-scale wheel of over 80 hp Demand for tractors has seen a decline, and the turning point in the market has begun to show itself. “At the end of the day, the monthly surplus is a deficit.” Agricultural machinery products have their own inherent laws. After a few years of rapid growth, the market will enter a period of self-adjustment. Therefore, the drop in the sales volume of medium and large wheeled tugs in the first half of this year is normal. For enterprises to actively adapt to the market adjustment period through measures such as shrinking front lines, optimizing product structure, and introducing competitive sales promotion policies.

Due to the impact of large and medium-size wheel tractors and agricultural vehicles, and the slow upgrading of small four-wheel products, slow market transfer and other factors, the output, shipments, and social sales of the small wheeled products industry have appeared in the first half of this year. In a large downturn, from January to June, cumulative shipments of large-scale enterprises totaled 150,000 units, which represented a year-on-year decline of 7%. Among them, sales of current winds were 105,000 units, down 2.5% year-on-year, and Futian 20,000 units, down 2.5% year-on-year. A delay of 18,000 units, a year-on-year decline of 19%, when the wind still accounted for an absolute advantage in the sales of small wheel trailers, and the market share is further increased, and industry resources are still concentrated in the time.

Fourth, the deterioration of the competitive environment, access thresholds raised

The big wheel drag industry has entered a stage of tight oligopoly competition. As can be seen from the above figure, the top three market shares in the industry are continuously increasing. From the perspective of the share of other companies, the market concentration is further increased, indicating that the industry has a large wheel drag The competition is very fierce. From a rational point of view, it is no longer suitable for newcomers to enter this market during the competition stage of tight oligopoly, but from the business directory of the National Agricultural Machinery Subsidy Catalogue in 2010, more than a dozen companies still enter this year, and these enterprises are protected at the local level. It may survive for a period of time. However, from the analysis of the market share of each enterprise in the past two years, it is difficult for new entry companies to get a share of their satisfaction. Large wheeled products are products with high stand-alone value. If there are no sales of more than 3,000 units, they will not be economies of scale. There will be no economies of scale. Companies will only accompany them in the market. In addition to the top 8 markets in 2009, other companies The total sales volume of products is only 6,000 units, and there are 33 companies entering the national subsidy list. The average annual sales volume of each enterprise is only about 180 units. From the market share of each enterprise in the first half of 2010, the market concentration rate of the big wheel drag market is still increasing. The living space for SMEs is still shrinking, so new entrants must think twice before proceeding.

As the intermediate product of size wheel dragging, the middle wheel drag market has been undergoing turbulent changes in recent years. Due to the changing needs and several large-scale agricultural machinery companies have focused their energies on the fight for the big wheel drag, the middle wheel has caused There is still no industrial hegemony in the dragging industry. The top 5 companies in the industry currently have a market share of 15% to 20%, and their competitive strength is among those in the sector. It is expected that in the period to come, the middle-wheel-towing industry will remain in a competitive environment that will be dominated by separatism, and there will still be a large number of agricultural machinery and small-tow companies that have joined the middle-wheel-towed market through product upgrades and horsepower extensions. Chaos will be the norm in the middle wheel industry. The market calls for industry leaders to integrate market resources and purify the competitive environment.

5. It will take time for the export market to pick up and return to normal.

As the international financial crisis gradually subsides, the market environment for export of domestic products is gradually improving. From the monthly export data of agricultural machinery products this year, the demand for agricultural machinery products in the international market is slowly recovering. One tow, Futian, Jinma, etc. The company has begun to focus on export trade. According to the statistics, the number of medium and large-sized wheeled tug exports exceeded 10,000 units in the first half of the year, an increase of nearly 20% year-on-year. It is expected that the export of the tractor market will continue to operate along the ascending aisle throughout the year, and the total export volume of large and medium wheel tugs will reach 19,000 to 20,000 units, The growth rate exceeded 10~15%; the number of small wheel tractors exported from 5000 to 7000 units, an increase of about 20~25% compared with the same period of last year.

Judging from the actual performance of each segment, the 40-70 hp product fell 4% year-on-year, and was the only power segment that experienced year-on-year declines. Products in the 25-40 hp segment, 70-100 equip, and 100 hp and above products showed a year-on-year comparison. A substantial increase.

The recovery of the export market rejoiced in export-oriented enterprises, but the number of tractor products currently exported is still very small, and the foreign trade export market needs to return to its pre-2008 level, depending on the speed of retreat of the international financial crisis and the effect of measures taken by various countries. Need to wait patiently.

VI. Increased profitability and strong business operations

The effect of the national agricultural machinery purchase subsidy policy gradually showed in the business performance indicators. According to statistics, the 41 main agricultural machinery enterprises had a main business income of 35.2 billion yuan in the first half of the year, a year-on-year increase of 11.5%, and a total profit of 1.46 billion yuan, a year-on-year increase of 13 %, the profit rate was 4.1%, and the industrial added value was 1.119 billion yuan, a year-on-year increase of 33.36%, and the cost decreased by 10% year-on-year, indicating that the tractor industry has now entered the stage of cost recovery after large-scale investment in recent years.

This year, the prices of raw materials are relatively stable. The main reason for profit growth is that companies strengthen management, reduce internal operating costs, and increase product value through product structure adjustments.

VII. High debt and potential operating risks

The subsidies for agricultural machinery activated the market's potential demand and gained approval and recognition from all walks of life. However, the problem of lagging funds settlement in the implementation process has not been effectively solved. At the same time, it is also a problem most criticized by agricultural machinery companies. As of the end of June, the accounts receivable of 41 large-scale enterprises totaled 6.1 billion yuan, a year-on-year increase of 31%. Comparing the growth rate of income and receivables, it can be seen that both the industry and the key enterprises have seen the growth rate of accounts receivable far away. The growth rate above revenue shows that the government’s policy requirements for speeding up the settlement of subsidies are still not well implemented. In addition, the inventory of finished products was nearly 3.9 billion, an increase of 50% year-on-year. Receivables and inventory will occupy a large amount of liquidity of the company. In this year's actual sales of tractors have decreased, the large increase in finished goods inventory and high receivables will cause the business situation to deteriorate and potential business risks to increase.

VIII. Analysis of competition situation in the second half of the year

In the second half of the year, there are still 5.5 billion agricultural machinery subsidy funds for protection. The overall demand for agricultural machinery industry will increase year-on-year, but the huge inventory of finished products hoarded in the channel and within the company in the first half of the year will encourage companies to reduce their prices. The vicious competition is likely to occur in each of the major marketing areas of agricultural machinery products, and powerful enterprises will take the opportunity to clean the industry.