Since May, the construction machinery industry has ushered in an unprecedented “price increase”.
Leading companies such as Sany Heavy Industry, XCMG Machinery, and Zoomlion Heavy Industry have successively issued price adjustment notices, announcing that the price of excavator products will increase by 3% to 5%.
This is the first time in the past three years that the industry has seen a large-scale collective price increase.
Behind the price increase are the dual drivers of rising raw material costs and recovering market demand.
After experiencing a quagmire of price wars for several years, China’s construction machinery industry is experiencing a profound value return, from “selling equipment” to “providing services”, and from “price competition” to “value creation”.
Is this wave of price increases a short-term cost game, or a substantial turning point in the industry’s competitive landscape?
After the price increase is implemented, can corporate profits really be improved?
Can overseas markets continue to play the role of growth engines?
Cost pressure coupled with recovery in demand
On May 1, Sany Heavy Machinery, a subsidiary of Sany Heavy Industry, took the lead in issuing a “Notice to Customers”, clarifying that excavator prices will increase by 5% starting from May 15.
Immediately afterwards, Xuzhou Xugong Excavating Machinery Co., Ltd., a wholly-owned subsidiary of Xugong Machinery, issued a notice on May 8, announcing that starting from June 1, the prices of different models of products would increase by 3 to 5 percentage points.
On the same day, Liugong also announced that it would increase the price of excavator products by 5% starting from May 20.
The three major leaders have intensively raised prices, breaking the “low price, low distribution” competition pattern that has persisted for many years in the industry.
It is worth noting that this is not an isolated price adjustment.
As early as the first quarter of this year, Sany Heavy Industry and Zoomlion had already raised the prices of concrete machinery products.
The reasons given by companies for price increases are quite consistent, that is, the cost of raw materials continues to rise.
Sany Heavy Machinery clearly stated in the price adjustment letter that the prices of raw materials such as steel, oil products, rubber, copper, and aluminum have continued to rise sharply, resulting in a significant increase in the company’s comprehensive costs.
From the perspective of the cost structure of construction machinery, steel accounts for as high as 30% to 50%, and changes in steel prices are directly transmitted to production costs.
However, it would be too simplistic to attribute the price increase entirely to cost pressures.
Many industry insiders pointed out that the core driving force of this round of excavator price game is not the transmission of cost pressures such as raw materials, but the change in the long-term supply and demand inflection point.
From the demand side, the industry recovery data does provide confidence for price increases.
Statistics from the China Construction Machinery Industry Association show that throughout 2025, major excavator manufacturing companies sold a total of 235,300 excavators, a year-on-year increase of 17%, and sales returned to the highest level since 2021.
Entering 2026, the recovery momentum will further accelerate.
In the first quarter, a total of 73,336 excavators were sold, a year-on-year increase of 19.5%; of which 33,757 were exported, a year-on-year increase of 36.1%.
Observed from a longer time perspective, the cumulative sales of excavators from January to April exceeded 100,000 units, a year-on-year increase of 22.2%.
In an interview with the media, the relevant person in charge of XCMG’s Excavating Machinery Division said that from January to February this year, the company’s domestic sales of excavators grew faster than the industry, and the market share of Zhongda excavators has further increased, benefiting from the demand driven by special bonds and ultra-long-term special treasury bonds, as well as high-standard farmland construction increasing the demand for small excavators, and the resumption of infrastructure projects such as water conservancy and railways boosting demand for medium and large excavators.
Relevant LiuGong staff also said that against the background of large-scale equipment updates and substantial growth in domestic sales, a new upward cycle in the industry is expected to arrive early.
A background that cannot be ignored is that the industry has been trapped in a “price war” for many years.
According to statistics, the terminal transaction price of 20-ton excavators has dropped by nearly 20% in the past three years. Vicious competition has led to a sharp decline in the average gross profit margin of the industry, and some small and medium-sized enterprises have fallen into the operating dilemma of “increase without increasing revenue”.
Today, choosing to raise prices during the window period when demand is picking up is, to some extent, a proactive correction by leading companies against the “involution” competition in the industry.
What is the profit improvement effect?
After the price increase signal was sent out, the core question that the market paid most attention to was: How much can corporate profits improve after the price increase is implemented?
To answer this question, it may be necessary to first clarify the current profitability of construction machinery companies.
Judging from the 2025 annual report, industry operating income and net profit have achieved restorative growth.
In the first quarter of 2026, the revenue of the construction machinery industry increased year-on-year, and the gross profit margin remained stable year-on-year.
Despite the impressive sales and revenue performance, the growth rate of net profit attributable to the parent company of the leading construction machinery company slowed down significantly in the first quarter of 2026.
According to the company’s financial reports, Xugong Machinery (000425.SZ)’s first-quarter revenue was 29.791 billion yuan, a year-on-year increase of 9.26%, but the net profit attributable to the parent company was only 2.056 billion yuan, an increase of only 0.86%; Sany Heavy Industry (600031.S
H) Revenue was 24.042 billion yuan, a year-on-year increase of 14.22%, and net profit attributable to the parent company was 2.481 billion yuan, a slight increase of 0.46% year-on-year; Zoomlion (000157.SZ) net profit attributable to the parent company even fell 37.3% year-on-year to 884 million yuan.
Why is the profit growth rate significantly lower than the revenue growth rate?
The answer points to an external variable—the exchange rate.
Zoomlion responded in the investor relations activity record sheet that the decline in net profit was mainly affected by exchange losses caused by the appreciation of the RMB. If exchange losses and land disposal factors are excluded, the company’s adjusted net profit increased by more than 50% year-on-year, and core operating performance remained strong.
XCMG Machinery disclosed that in the first quarter of 2026, exchange losses and foreign exchange lock-up fees exceeded 400 million yuan, while exchange gains exceeded 400 million yuan in the same period last year.
In other words, the “one positive and one negative” difference in exchange factors is as high as more than 800 million yuan, which has an obvious impact on the income statement.
“This cycle of the market has higher requirements for companies’ repayment capabilities, cash flow quality and asset turnover efficiency. Leading companies no longer simply pursue revenue expansion, but pay more attention to high-quality orders and cash flow security.” Soochow Securities analyst Zhou Ershuang said that overall, Sany, Xu
The growth rate of net profit attributable to parent companies of leading companies such as Gongcheng and Hengli is still higher than the industry average. The main reason is that the operating quality of main engine plants continues to improve, driving the profitability of the main business to increase. At the same time, the results of the overseas strategy continue to be realized, the proportion of overseas revenue increases and the regional structure is more balanced, which can effectively hedge against exchange disturbances.
So, how big is the profit improvement effect of this round of price increases?
Guo Qiang, an analyst at First Venture Securities Research Institute, gave a set of judgments: After this product price adjustment, the industry’s net profit is expected to resume year-on-year growth in the second quarter of this year.
Judging from the synchronized price adjustments of all major manufacturers in this round, competition among leading domestic construction machinery companies has begun to ease. The industry structure is expected to be stabilized as a result, and the profitability of the subsequent construction machinery industry is expected to enter a period of continuous recovery.
It is worth mentioning that the role of overseas business in driving profits is becoming increasingly prominent.
In 2025, the export revenue of major domestic construction machinery manufacturers will account for close to or exceed 50%, and the gross profit margin of overseas business is usually 3 to 5 percentage points higher than that of domestic ones.
This means that overseas markets are not only the engine of growth, but also the “ballast stone” of profit quality.
Acceleration of going overseas and room for growth
If price increases are a signal of recovery in domestic demand, then “going overseas” is the most determined long-term narrative of China’s construction machinery industry.
In 2025, the pace of globalization of China’s construction machinery will accelerate significantly.
According to data from the General Administration of Customs, the export volume of construction machinery equipment and parts will reach US$60.169 billion in 2025, a year-on-year increase of 13.8%.
In the first quarter of 2026, this data increased significantly by 24.3% year-on-year to US$16.066 billion.
Su Zimeng, president of the China Construction Machinery Industry Association, once said that China’s construction machinery industry has accumulated a good technical foundation in the early stage. After several years of verification in the international market, it has been generally recognized by international customers.
The proportion of overseas revenue of leading companies has achieved leaps and bounds.
According to Sany Heavy Industry’s annual report, overseas revenue in 2025 will reach 55.856 billion yuan, a year-on-year increase of 15.14%, accounting for approximately 64% of total revenue, gross profit accounting for 71%, and overseas revenue gross profit margin of 31.7%, significantly better than domestic business.
Up to now, SANY products have covered more than 150 countries and regions, and 37 production and manufacturing bases have been established around the world.
Zoomlion’s overseas growth is even more rapid.
In 2025, overseas revenue will increase by 30.52% year-on-year to 30.515 billion yuan. The average annual compound growth rate of overseas revenue in the past four years has been as high as 52%, accounting for 58.56% of the company’s total revenue.
Looking at different markets, the African region grew by more than 157% year-on-year.
XCMG Machinery’s overseas revenue also reached 48.599 billion yuan, a year-on-year increase of 16.58%, and its share increased to 48.20%.
So, can overseas markets continue their high growth trend?
“According to calculations, the long-term growth potential of domestic main engine manufacturers’ overseas revenue exceeds 200%.” Zhou Ershuang analyzed that Europe and the United States are the world’s largest construction machinery markets, with strong brand stickiness. With the gradual increase in production of local factories of Sany and Xugong and the gradual development of sales channels, it is expected that the market share of Chinese brands will reach 15% in 2030; as Africa, East Asia and Africa
Due to the urbanization process in countries along the “Belt and Road” such as South Asia and Central Asia and the gradual advancement of China’s foreign mineral investment, it is expected that the market share of Chinese brands will reach 60% in 2030; in South America, because European and American leaders such as Caterpillar have opened up the market in South America earlier, the market share is relatively stable, and the market share of Chinese brands is expected to reach 33% in 2030.
More importantly, Chinese construction machinery companies are upgrading from simple “product exports” to “industrial exports overseas”, and the logic of going overseas has undergone a qualitative change.
Zoomlion has invested more than half of its R&D resources overseas. The construction of the second phase of factories in Germany and Hungary has been accelerated, and the localized supply chain system in Europe has taken initial shape.
Sany Heavy Industry has production capacity in Indonesia and the United States, and its South African factory is also under orderly construction.
It is not difficult to see that the price increase in the construction machinery industry is not only a passive response to the rising cost of raw materials, but also an active breakthrough in the industry from “price for volume” to “value competition”.
Whether it is the continued recovery of sales, the rapid growth of exports, the profit restoration of leading companies, and the continued increase in industry concentration, many signals indicate that China’s construction machinery industry is passing through the cycle trough and returning to the upward path.
But the road ahead will not be easy.
The sustainability of domestic infrastructure investment, the recovery pace of the real estate market, the uncertainty of the overseas trade environment, and the disturbance of corporate profits caused by fluctuations in the RMB exchange rate are all important variables affecting the development of the industry.
For the entire industry, price increases are just the beginning.
The real test is whether, after bidding farewell to the “comfort zone” of price wars, Chinese construction machinery companies can truly establish new competitive advantages centered on technological innovation, service capabilities and brand value.
