"Failed" Agricultural Machinery Market

This year's earth is not very flat. A big fire in Russia has dyed half the sky in Europe. Pakistan suffered no floods in 80 years, suffered major mudslides in Zhouqu, Gansu, floods in the southern provinces, and new heat waves in the north... a series of disasters left us unable to survive on the “blue planet”.

Linked to the destiny of the poor earth, this year's agricultural machinery market was no exception. Due to market distortions and information asymmetries, the agricultural machinery market has shown more obvious "failure" symptoms, becoming unpredictable and difficult to cope with, as it has encountered the "mysterious Indian virus."

This year, the unpredictable agricultural machinery market has played a fashionable "hide and seek" game with entrepreneurs. By the end of 2009, with the good news of increased subsidies, entrepreneurs were busy. Not until the end of the Lunar New Year, Curi's products were filled to meet the "good starter" this spring. As a result, the agricultural machinery market entered a sustained weakness after a short period of euphoria in January and February. Moreover, most companies are not fully prepared for this.

For many years, the fast-walking agricultural machinery market has finally appeared “exhausted” and it seems that it has reached the point where “convalescence” is needed.

The increase in the output value of the chain fell compared to the spring plowing. This is the peak season for sales of agricultural machinery products. However, this year is an exception. In the case of a substantial increase in the amount of purchase subsidies, there is no enterprise expectation in the agricultural machinery market. At least, the performance of the agricultural machinery market in the first half of the year was out of the ordinary. The sales of major farm machinery products were unsatisfactory, and they were not busy during the peak season. The effect of subsidies was not obvious enough.

The growth rate of the industrial output value fell rapidly from the previous quarter. Data from the China Agricultural Machinery Industry Association showed that in the first half of the year, the agricultural machinery industry achieved a total output value of 109.107 billion yuan, a year-on-year increase of 22.93%; and the industrial sales value of 134.121 billion yuan was completed, a year-on-year increase of 21.92%. Behind this fairly pretty data, there is hidden concern that the rate of increase will continue to decline. The increase from January to February at the beginning of the year was as high as 34.29%. It was 22.93% in June and a decrease of 11.36 percentage points in six months.

Obviously, a pessimistic mood was written on the faces of bosses. The industry is generally not optimistic about this year's agricultural machinery market. The overall judgment is that the increase will slow down and the overall performance will be flat. It is understood that in July and August, with the gradual implementation of purchase subsidies, the market has improved, but the overall situation has not changed significantly.

According to the statistics from the China Agricultural Machinery Industry Association, in the first half of the year, the increase in production and sales of medium-to-medium-sized enterprises dragged down month by month. In June, the cumulative output increased by 15.33%; from January to February, 81.97%, the six-month increase decreased by 53.31 percentage points. Market performance and expectations "Icefire two days." For example, in China, a total of 61,610 tractors were sold in the first half of the year, a year-on-year increase of 9.32%. This figure was 31% lower than the increase of 40.35% in 2009.

Did the agricultural machinery market adjust? The same issue is discussed in the industry. The reporter believes that although it can be seen that the performance of the market in this year can be seen in the slightest drop, it is still not enough to make a positive judgment. It is undeniable that Dazhong Tuo, as a key promotion product of agricultural mechanization, has been the focus of purchase subsidies every year since 2004. In the past six years, the market has never had a "respite". At present, the amount of social possession is already quite high and market saturation has reached a high level. If market adjustments occur this year, the sales growth rate will slow down, which is also in line with the general rules of market development.

Then, if the agricultural machinery market is guided by Dazhong Tuo into the adjustment period, how much effort? How long is the time? In this regard, the industry is generally concerned. Gao Yuanen, chairman of the China Agricultural Machinery Industry Association, recently put forward his views at an industry conference, and the agricultural machinery market may enter the adjustment period. He reminded enterprises that the research and development of new products, strengthening product quality, and accelerating the pace of technological transformation should be the focus of work in the new period.

In fact, most companies in the industry have long felt the pulse of the market's adjustments. In recent years, several key domestic enterprises have significantly accelerated the technological reserves for large-scale tractor R&D. Many companies have targeted the development of multi-functional combine harvesters. The development of small agricultural machinery has received increasing attention in recent years. We can clearly feel that the pace of adjustments to the product structure has accelerated over the years.

The negative growth of the combine harvester According to the statistics of the China Agricultural Machinery Industry Association, in the first half of the year, the combine harvester continued to grow negatively, and the monthly growth rate increased. The average monthly decrease rate was close to 4 percentage points. From January to February, 16560 units were sold and sold, a year-on-year decrease of 10.24%; in June, a total of 66,750 units were produced and sold, a year-on-year decrease of 25.34%.

Looking at the performance of the market over the past few years, the combine harvester is a farm machinery product that is “the least looking at the complexion”. This year's market performance has actually made the industry eye-catching, just as artificial satellites run out of orbit and are not controlled by the ground.

In fact, the industry is not optimistic about the market situation in 2009. However, the sky fell out of a "financial crisis," and in the midst of a depressing macroeconomic situation, the combine harvester can be regarded as a rare beneficiary. Due to the influence of multiple factors such as pulling domestic demand and returning migrant workers, the market has suddenly become in short supply. The annual output of 107,900 units, an annual growth rate of 27.61%, has created a historical record.

By 2010, the industry originally hoped to continue to improve with the inertia. Under the influence of favorable factors such as the increase in subsidies, companies began to organize production from the end of last year. However, it turned out to be contrary to what seemed to be an extraordinary climate this year that put an end to all illusions. “Because of the excessive consumption in the market, the narrowing of the cross-region operation radius, the decrease in the number of single operations, the decrease in the income of the operators, and the impact of factors such as the return of peasant workers to the city, this year has caused slow sales in the combine harvester market, and the rate of decline has increased month by month. "This is an analysis made by Gao Yuan-en at a meeting held in Sanmen County, Zhejiang Province. I am afraid it is also the reason identified by the industry."

The reporter had the privilege of visiting several companies in April with the research group of the Ministry of Industry and Information Technology. The situation was hesitant to see. Because there are no larger warehouses, the combine harvester has danced a "long dragon array" on the road. The playground's machine is like Han Xun's "eight gossip" formation. It is understood that in the first half of the year, the decline rate of several major combine harvesters has exceeded 30%. Foton Lovol sales decreased by 51% year-on-year; Luoyang Zhongyue dropped by 42% year-on-year; Shandong Gold Million dropped by 36% year-on-year; Jiangsu Ward Caterpillar dropped 32.6% year-on-year.

"This year, the decline in the production and sales of combine harvesters is basically a foregone conclusion, and it is expected that the rate of decline will be 20% to 30%." Minister Kuo Linhua of Kubota Marketing Department expressed his views at that time. Of course, the agricultural market is not without bright spots. Among them, full-feeding models can realize multi-functionalization, and the price is relatively cheap. The company's market sales are better than the half-feeding models. Small farm machinery, cotton processing machinery, water pumps and other products have increased sales due to subsidies or due to increased subsidies in hilly areas in the mountains.

High stocks remain high In the first half of this year, the most frustrating thing for companies was to keep up with high inventory. Misjudgments were made, and horsepower was used to expand production capacity; the product structure was traditional and the market's ability to digest was limited; market failures and expected hot scenes did not occur. The result must be that the company's inventory remains high.

"Even if there is a certain amount of sales, there is a considerable part of the backlog in circulation." In May, the reporter called China's market department Liu Zhende: "It's called a squeak." Even if there are sporadic sales, most of them are still in sales channels. This is the actual situation that most companies screen. Not only that, the half-feeding combine harvester has also suffered from “Waterloo”. The situation of several major companies does not seem to be optimistic. Kubota’s output has plummeted, and Yanmar and Jingguan have simply put their main forces on the production of rice transplanters.

Enumerating the data of major companies may be able to figure out what the bosses feel at this moment. As of the end of June, the total inventory of 17 enterprises that mainly produce large and medium-sized tractors was 18,444, an increase of 56.58% year-on-year. Among them, China's One Tow, Deere Ningbo, Shan Tow Agricultural Machinery, Yancheng Ma Hengda and other companies' inventory growth are all above 50%, and the highest is over 280%. In addition, there are large stocks of rice combine harvesters that often produce Fengling, Jiangsu Wode, Jiangsu Yucheng, and Jingguan agricultural machinery.

Receivables increase in receivables means that the product has not gone through a complete sales process, which means that the product has not yet reached the user's hands. Increased accounts receivable has become one of the most troublesome issues for entrepreneurs in the first half of the year.

By the end of June, the accounts receivable of 17 enterprises that mainly produce large and medium-sized tractors was 7.276 billion yuan, an increase of 32.12% year-on-year. Among them, the growth rates of several major companies such as China One Trailer, Deere Ningbo, Shantuo Agricultural Machinery, and Yancheng Ma Hengda all exceeded 60%, and some were as high as over 200%.

Even if the product sent from Curry, it will remain in circulation. The high level of receivables has increased the risk of business operations, put a severe test on the company's capital chain, and tested the ability of the entrepreneurs to bear.

Reproduce the "price war"?

"Price war" is a commonly used strategy and tactics of agricultural machinery enterprises. In recent years, most agricultural machinery companies have not used it as a major sales strategy. The agricultural machinery market has not seen the smoke of "price wars" for many years. However, this year seems to be an exception.

In view of the situation of the agricultural machinery market in the first half of the year, some enterprises cut their annual production plans in a timely manner and concentrated on accelerating the progress of new product development in order to respond to the severe market situation. However, in the face of stubbornly high inventory and payment pressures, companies have generally adopted price-cutting sales promotions. A phenomenon worthy of industry attention is that the "price war" will return to the agricultural machinery market again this year.

For example, an enterprise has launched price reduction promotions in Anhui. During the event, the company's harvesters, in addition to enjoying state subsidies, purchasers can also choose to enjoy the other five kinds of preferential methods, and various concessions can be calculated cumulatively. The large scale of promotional activities has not been seen in the agricultural machinery market for many years.

This is not only the case. "All things in Curry have been shaken off." In May and June of this year, if you see the personnel of the Corporate Marketing Department, this phrase has almost become their mantra.

Significant reduction in the rate of increase in benefits is the transcript of the company’s production and business activities and the source of the company’s reproduction. In the first half of the year, it was a little embarrassing that agricultural machinery companies with low profit margins shyly held their own transcripts.

By the end of June, from the total profit of 17 tractor manufacturing enterprises, the total profit was RMB 221 million from January to February, an increase of 740.74% year-on-year; and by June, the total profit was RMB 1.387 billion, only a year-on-year increase. It was 11.41%, a decrease of more than 700 percentage points.

From this point of view, enterprises have no longer considered profitability factors when they start a "price war." It is understood that since the beginning of April, in order to digest the large inventory generated due to the high production plan at the beginning of the year, all manufacturers have substantially reduced the sales price of the product, and the price of a self-propelled wheat combine harvester has been reduced by more than 4,000 yuan. Basically no profit sales.

“The price of some brands of self-propelled wheat harvesters has fallen below 60,000 yuan, and there has been a sell-off phenomenon in the market.” According to an enterprise sales manager, “some companies still have credit sales.” The general opinion in the industry is that The "price war" will lead to vicious competition among enterprises, and the quality of products will be challenged to some extent.

Do not understand this year's agricultural market trends?

Perhaps it will be too early to give the conclusion that the agricultural machinery market has failed because of the phenomenon in the first half of the year. However, the long existence of such anomalies is enough to cause any result without too much doubt. The 2010 agricultural machinery market is really intriguing. Whether you read it or you don't understand it? The phenomenon is worthy of deep concern.

It is understood that the market seems to have improved after entering July. Some time ago, from a company friend, he finally came up with a "happy news." He was pleased to say that the stocks that had been under pressure in the first half of the year were "handled out." Is the market really improving? Still need further observation.