Demand for special equipment is cooling due to the weak ruble

Sales of road construction (DST) and special-purpose equipment continue to grow: in January-September, domestic players alone sold equipment worth RUB 59 billion. Importers are also talking about an increase in sales, while Russian factories are increasingly concerned about the growth in the import of equipment from abroad. Rosspetsmash points out the unequal conditions of competition, calling for an increase in recycling collection. However, the Russian Federation has already accumulated equipment from China, the sale of which will take time due to the slowdown in demand after the Central Bank rate increase.

Sales of domestic special equipment in January-September increased by 22%, to 59 billion rubles, as calculated by Rosspetsmash (combines data from factories that produce 80% of the total volume of DST produced in the Russian Federation). Output for three quarters showed a similar increase – by 22%, amounting to 65.2 billion rubles. The association explains the positive dynamics by maintaining high construction volumes and the implementation of infrastructure projects.

In units, shipments of pipe-laying cranes (by 4.1 times), excavators (by 99%), road rollers (by 22%), loader cranes (by 21%), mini-loaders (by 16%), and front-end loaders increased (by 6%), backhoe loaders (by 1.6%). At the same time, sales of motor graders (by 27%), telescopic loaders (by 21%), crawler bulldozers (by 19%) and truck cranes (by 1.6%) are declining.

UMG (SDM LLC) says that it has increased excavator sales by more than 70%. In the overall market, the main growth is expected in the segments of wheeled excavators and backhoe loaders. The top five leaders in vehicle-based equipment now include truck cranes, concrete mixer trucks, garbage trucks, as well as road equipment and equipment for oil and gas production, adds BWG Marketing Director Anna Erokhina, citing Avtostat data.

Rosspetsmash talks about the problem of aggressive imports, which “negatively affects the production rate of Russian DST and has already led to a decrease in sales of certain key types of machines.” They indicate that domestic factories are in unequal conditions of competition with foreign companies, including due to more favorable production conditions in China. In addition, in the Russian Federation there is no production of a number of key components, “or they are produced in insufficient volumes,” they say at Rosspetsmash. The association again calls for an increase in recycling collection and increased government support for the industry.

Imports, according to Rosspetsmash, dominate in the segments of motor graders, excavators, road rollers, front loaders, and asphalt mixing plants (import share 65–94%). It should be noted that in the Russian Federation, traditionally, the main sales of loaders were imported from China, and Western players who previously worked in the Russian Federation also spoke about the difficulties: due to the scale of the Chinese domestic market and large production volumes, it was difficult to compete with Chinese companies even before the crisis.

In January-September, more special equipment and DST were imported into the Russian Federation than in the entire 2022, says Anton Nikolaev, development director of the official representative office of the Chinese Sany in Russia. “The opportunity has opened up for Chinese manufacturers to quickly fill market niches that have become vacant due to the departure of a number of brands from the Russian Federation,” he explains. The market was quickly filled with equipment of various brands, including completely new ones for the Russian Federation, and now “it has become oversaturated,” says Mr. Nikolaev. In the third quarter, demand for equipment began to decline, “this is due to an increase in exchange rates, as well as the Central Bank rate,” he notes. According to him, a further increase in the rate will lead to a cooling of demand. At the same time, “many suppliers have warehouses filled with equipment and DST,” he continues. “The competition is quite strong, because many companies brought equipment to Russia earlier at a lower exchange rate and are now selling the remainder from warehouses at a lower price in ruble equivalent,” concludes Mr. Nikolaev. In nine months, Sany imported more than 3 thousand units of equipment into the Russian Federation, approximately 80% of the volume was sold.

Dmitry Babansky from SBS Consulting expects sales to cool further in volume terms in the fourth quarter. “Now the money market has grown largely due to rising prices, and with a high rate and the continued weakening of the ruble, purchasing power will decrease,” he explains.

Olga Nikitina