Fading Chinese Excavator Market... HD Hyundai Infracore Targets North America with 'Dibellon'

Last Year, Construction Machinery Business Sales in China Down 45.9%
Sales in North America and Europe Up 24.1%
Expanding Compact and Eco-Friendly Products to Target Emerging Markets

HD Hyundai Infrastructure Core, a subsidiary of HD Hyundai, the intermediate holding company of the construction machinery division of HD Hyundai Construction Equipment, is accelerating its sales diversification strategy. This is because the world's largest excavator market, China, has yet to recover due to the limited effects of China's reopening (resumption of economic activities) and the real estate market downturn. The company plans to reduce its dependence on the Chinese market and target North America and emerging markets, where expectations for large-scale infrastructure investments are high, through its new construction equipment brand 'DEVELON.'

HD Hyundai Infrastructure Core's sales in the Chinese construction machinery business last year amounted to 596.3 billion KRW, shrinking by 45.9% compared to the previous year. Although the company set a record for the highest sales in China in 10 years in 2020, it was hit hard by the contraction of the excavator market in China starting last year.

The China Construction Machinery Association reported that HD Hyundai Infrastructure Core's excavator sales in China last year were 4,100 units, a 68% decrease from 12,700 units the previous year.

The new mini excavator DX35Z-7 launched this year by HD Hyundai Infracore.
[Photo by HD Hyundai Infracore]

The decline in sales volume is interpreted as a natural result of reduced excavator demand due to restrictions on local infrastructure construction caused by the spread of COVID-19 in China. The local housing market downturn, caused by the Chinese government's real estate regulations, also negatively impacted excavator sales. As of last month, new housing prices in 70 major Chinese cities increased by 0.3% compared to the previous month. Although this marked the first rise in 18 months since August 2021, prices fell by 1.86% compared to January of last year.

The increased competitiveness of domestic Chinese companies also acted as a negative factor. Dong-ik Jung, a researcher at KB Securities, explained in a report, "The sales proportion of equipment under 5 tons, which has relatively low technical entry barriers in the Chinese market, has increased," adding, "This highlighted the price competitiveness of local Chinese companies and affected the poor performance of Korean companies."

To offset the sluggish sales in the Chinese market, HD Hyundai Infrastructure Core has accelerated its global market restructuring. In particular, it has turned its attention to the North American market, where demand for construction machinery is rapidly increasing. As a result, sales in advanced markets such as North America and Europe rose by 24.1% to 1.2825 trillion KRW. The sales share of North America and Europe accounted for 34%, significantly surpassing China’s 16%.

14-ton class wheel excavator (model name: 14W EREV) from HD Hyundai Infracore.
[Photo by HD Hyundai Infracore]

The growth in the North American region is also confirmed by figures. North American exports soared by 42.8% in domestic exports last year, and excavators grew by 52.7%, recording export sales of 848 million USD. This year, with continued infrastructure investments by the U.S. government, exports centered on excavators and forklifts are expected to be revitalized.

An HD Hyundai Infrastructure Core official said, "Various infrastructure investment policies in North America and emerging markets (Asia, Middle East & Africa, Latin America) are generating solid demand," adding, "We plan to expand the compact (small construction machinery) equipment business favored in the North American market, including the recently launched mini excavator (MEX) new product."

Environmentally friendly products equipped with the DEVELON brand are also expected to be released continuously. HD Hyundai Infrastructure Core plans to launch a 1.7-ton mini electric excavator in the first half of this year. The company has also completed the development of a 15-ton hydrogen excavator.

The company intends to closely monitor the situation in the Chinese market. The official explained, "Although there are ongoing possibilities that the excavator market will recover in the second half due to China's reopening, it is difficult to predict," adding, "Before the full-scale downturn in China, having a high concentration in a specific country makes it difficult to respond to various situations, so we are approaching with a strategy to diversify the market."