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The agricultural machinery market continued its downward trend in the first half of the year, and significant internal and external pressures are expected to persist in the second half.
Release date:
2018-08-29
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Since the beginning of this year, the agricultural machinery industry has faced a particularly challenging downturn in the market. According to statistics released by the National Bureau of Statistics, in the first half of the year, cumulative production of large tractors, medium-sized tractors, small tractors, and harvesting machinery reached 22,000 units, 136,000 units, 249,000 units, and 269,000 units, respectively—representing year-on-year declines of 20.4%, 8.8%, 31.2%, and 0.6%, respectively. These figures mark another sharp drop following the overall decline already seen in 2017.
Since the beginning of this year, the agricultural machinery industry has faced a particularly challenging market downturn. According to statistics released by the National Bureau of Statistics, in the first half of the year, cumulative production of large tractors, medium-sized tractors, small tractors, and harvesting machinery reached 22,000 units, 136,000 units, 249,000 units, and 269,000 units, respectively—representing year-on-year declines of 20.4%, 8.8%, 31.2%, and 0.6%, respectively. These figures mark another sharp drop following the overall decline already seen in 2017.
The landscape for the first half of the year has already taken shape—so, what will be the trajectory in the second half? After synthesizing insights from industry experts, the author has compiled the following outlook:
The policy environment remains stable yet leans slightly toward easing, with more positive news than negative.
According to expert analysis, the domestic economy maintained steady performance in the first half of this year. Growth is expected to slow slightly in the second half, with forecasts projecting economic expansion rates of 6.7%, 6.6%, and 6.6% for the second, third, and fourth quarters, respectively. Overall, the full-year growth rate is anticipated to remain around 6.7%. Looking ahead, proactive fiscal policies will continue to be implemented in the second half, with relevant institutions accelerating the pace of fiscal spending to effectively leverage fiscal measures in fostering stable economic growth and supporting structural reforms. Meanwhile, monetary policy is expected to stay firmly neutral, helping to prevent a further rise in leverage ratios and mitigate potential financial risks. In addition, the government will intensify targeted support for key sectors such as small and micro enterprises, agriculture, rural areas, and inclusive finance, aiming to reduce financing costs and promote their sustainable growth.
Focusing on the agricultural equipment sector, the policy factors facing the industry in the second half of the year remain more supportive than challenging. In addition to the ongoing implementation of the "Three Rural Issues" policies established at the beginning of the year, the Ministry of Agriculture and Rural Affairs has decided to launch a nationwide supervisory inspection campaign in August 2018 to assess the implementation of the 2018 agricultural machinery purchase subsidy program. The inspection will specifically focus on key areas such as policy rollout, full-scale subsidy distribution, efficient fund management and utilization, and innovations aimed at enhancing administrative services. Meanwhile, to streamline certification processes and open up channels for new products, the ministry has introduced a series of targeted measures. These include accelerating standardization efforts to bolster both R&D and market adoption of innovative agricultural machinery, as well as refining subsidy mechanisms and procedures to boost support for high-efficiency farming equipment. Notably, the ministry’s recent initiatives have increasingly concentrated on ensuring robust policy implementation and enforcement—areas where improvements are most urgently needed. Overall, this suggests that the subsidy policies will benefit from a favorable environment in the second half of the year, with the government continuing to ramp up its backing for cutting-edge product development and technological innovation, delivering significant long-term advantages for the sector.
Industry growth continues to slow, while market fragmentation and weakening demand persist.
In the first half of this year, the agricultural machinery market continued to decline, with traditional products—such as medium- and large-sized tractors, combine harvesters, and agricultural three-wheelers, which still account for 50% of the market share—experiencing double-digit declines. Meanwhile, as global economic recovery weakened in the first half, coupled with growing economic policy disagreements and persistent trade tensions, uncertainty in international markets intensified. This has raised concerns that trade conflicts could further dampen export growth in the second half of the year. As a result, agricultural machinery companies are expected to see a significant contraction in their overseas business compared to last year.
It is clear that, in the second half of this year, China's agricultural machinery market will face dual pressures: insufficient domestic demand and slowing external demand. As a result, industry growth is likely to decelerate further, with overall growth expected to remain between 6% and 8%. At the same time, profit margins are projected to continue declining, placing agricultural machinery companies under significant pressure to undergo critical transformations and upgrades if they hope to survive in an increasingly competitive landscape.
Since 2014, China's agricultural machinery market has reached a turning point, with overall growth slowing down, profit margins shrinking, and the market shifting from a decade of rapid expansion—often referred to as the "golden decade"—into a period of steady, low-speed growth and structural adjustment. In the first half of this year, the broader market situation remained unchanged, continuing its downward trajectory despite last year’s already weak market conditions. Based on current trends, the outlook for the second half of the year remains grim, primarily due to three key factors: First, market saturation and overexposure have directly contributed to declining sales; second, underlying demand is weakening as unstable grain prices and high farming costs make agriculture less profitable, undermining the economic foundation that supports demand for agricultural machinery; and third, the transition between old and new models is still incomplete, meaning the mismatch between insufficient supply and lagging demand will take considerable time to resolve—not yet happening at present.
In summary, although several key products—such as large and medium-sized tractors, corn harvesters, livestock machinery, cotton pickers, and potato harvesters—will enter their peak sales periods in the second half of the year, market conditions are expected to remain sluggish. This is due to factors like weak consumer demand, gradual upgrades in the existing market inventory, insufficient overall market size for niche product categories, ongoing agricultural restructuring, and persistently low grain prices. As a result, uneven demand across different product categories and regions is likely to become the new norm, with user-driven, essential needs taking center stage. Meanwhile, the pull effect of government subsidies will gradually diminish. Domestically, the market will be dominated by efforts to manage inventory, drive transformation, and promote industry upgrades, ultimately leading to a diversified and differentiated development landscape.
Cultivate the market with precision by aligning with both heaven and people, while steadily pursuing innovation, upgrades, and balanced progress.
In the second half of the year, while industry growth is expected to stabilize and gradually slow down, there will still be opportunities driven by improvements in market demand structure and enhancements in product quality. As the saying goes, even in the toughest markets, there’s no shortage of outstanding companies. Although the agricultural machinery market continues its downward trend—marked by weakening demand—this decline doesn’t mean the end of progress altogether. Instead, it presents fewer sales opportunities. To stay competitive, agricultural machinery firms must actively identify and capitalize on structural opportunities within their specialized niches.
In the second half of the year, structural opportunities in the agricultural machinery industry will primarily emerge in several key areas: First, there is robust demand for emerging niche products—such as machinery tailored for garlic planting, onion and ginger harvesting, and chili stem-cutting operations. Second, domestic manufacturers are poised to replace high-end imported products, particularly in segments like large-scale silage harvesters, ultra-high-horsepower tractors, bale-wrapper knotters, and premium electronic components. Third, traditional product categories will see innovation and comprehensive upgrades, incorporating cutting-edge technologies and manufacturing processes to enhance lean production practices. This will ultimately boost the reliability, durability, and versatility of products, earning deeper trust and recognition from users. Fourth, revitalizing the existing market through enhanced after-sales services is crucial. For mature products like wheat harvesters and small-to-medium-sized tractors, focus should be placed on secondary-market transactions, trade-in programs, and the provision of spare parts along with complementary service offerings—strategies that not only breathe new life into the established market but also create a synergistic relationship with growing segments. Finally, it’s important to approach the new business models and industry trends spurred by "Internet Plus Agricultural Machinery" with a balanced and rational mindset, helping to unlock fresh avenues for revenue growth.
In the second half of the year, agricultural machinery companies must align with the overall industry slowdown, focus intensely on the market’s end consumers, actively seek out structural market opportunities, prioritize customers’ essential needs, innovate traditional products to drive upgrades, meet diverse user demands, and identify sustainable profit drivers—allowing them to advance steadily while maintaining stability, ultimately paving the way for growth after securing their survival.
Great waves wash away the sand, revealing true gold—these turbulent times are reshuffling the deck.
According to statistics, domestic agricultural machinery brands have experienced a collective decline in the first half of the year, with one-fifth of these brands disappearing amid the broader market downturn. Currently, China boasts over 2,400 agricultural machinery enterprises—both large and small—yet their overall quality remains uneven. Many companies remain heavily concentrated in the mid-to-low-end segments, while significant gaps persist in critical areas such as brand building and product innovation. As the momentum from government subsidy policies begins to wane—both now and in the near future—the industry’s inevitable reshuffling is already taking shape. Facing these evolving market dynamics and trends, the second half of the year will bring even tougher challenges for agricultural machinery firms. Mergers, acquisitions, and outright eliminations between companies and brands are likely to become commonplace. In fact, we can expect the pace of industry consolidation to accelerate further. Yet, the timeless natural law of "survival of the fittest" remains unchanged: only those who adapt and innovate effectively will ultimately thrive. Ultimately, the companies that endure—and perhaps even emerge stronger—will be poised to claim leadership in this vital sector. Looking ahead, we eagerly anticipate more outstanding domestic enterprises stepping up to carry the torch of national agricultural machinery manufacturing, ensuring that China continues to lead the global agricultural technology landscape.
Overall, in the second half of the year, the domestic agricultural machinery market is more likely to see slower growth amid the combined influence of multiple factors. The agricultural machinery industry now faces a series of challenges to its survival and development. As a result, agricultural machinery regulators must continuously optimize the industry environment and strengthen policy support. Meanwhile, agricultural machinery companies can only secure their long-term competitiveness by driving innovation, breaking through barriers, and building distinctive core strengths.
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