Changjiang: Optimistic about leading domestic tractor brand expanding overseas.

Changjiang published a research report stating that Germany, the United States, France, Italy, and other developed countries dominate the global tractor export market. China's share in the global tractor export market is only about 3.2%, with significant room for improvement. With the deepening of channel construction, agricultural machinery improvement based on the characteristics of agricultural operations in export destinations, and continuous optimization of after-sales service measures, the competitiveness of domestic tractor products is expected to continue to improve and gain more market recognition. Currently, the gross profit margin of tractors exported overseas is generally higher than domestically, and the development of overseas business is expected to further benefit the top domestic tractor companies in terms of revenue and performance growth. The main opinions of Changjiang are as follows: Exploration of the overseas tractor market Space, structure, and pattern The global tractor export market is steadily increasing, with the global tractor export value reaching $30.112 billion in 2023, a year-on-year increase of +8.6%. In particular, medium and large tractors dominate exports, accounting for 72% of the global export value of large tractors. At the same time, developed countries such as Germany, the United States, France, and Italy dominate the global tractor export market, with China's market share accounting for only about 3.2%, still leaving significant room for improvement. The competitive advantage of domestic tractors in various power segments in the global market is not particularly prominent. The global tractor import value is steadily increasing, with import markets also concentrated in Europe and North America. In 2023, the global tractor import scale was $32.07 billion, up +8.1% year-on-year. The import value of tractors in Europe and North America accounts for 51.7% and 28.0% respectively, while the import value of tractors in regions such as Asia, South America, and Africa is relatively small. Additionally, the import value of small and medium tractors is relatively larger in Asia, North America, and Africa, while the import value of large tractors is higher in Oceania, South America, and Europe. Tracking of key market operations The Russian market is under pressure, but the expansion of emerging markets in the tractor market is promising. The Russian market is an important market for the overseas expansion of domestic agricultural machinery. In 2023, tractor sales in Russia were 36,100 units, with large tractors over 100 horsepower accounting for 28.6% of sales. In recent years, the market share of German, American, and French tractors in Russian imports has rapidly declined, while Chinese tractors have rapidly increased their market share, reaching 76.5% in 2023. Chinese tractors have a significant advantage due to their high cost performance, good driving experience, and functionality. However, the Russian market is currently affected by an increase in the scrap tax for 30-340 horsepower wheel tractors, which is multiple times higher, impacting the demand in the end market. The domestic tractor export market to Russia is facing some pressure. The market size of developed countries is large, with the registration of agricultural tractors in major European countries reaching 158,100 units in 2023, and tractor sales in the United States reaching 250,300 units. The sales share of large tractors in Europe and America has some differentiation, with Europe having a higher share. In 2023, due to the decline in grain prices and high agricultural production costs, the demand for tractors in the European and American markets is under pressure. Developed regions in Europe and America are the main markets for tractor imports and exports, with countries such as the United States, France, Germany, and Italy holding significant weight in the global tractor market. However, domestic tractor exports to European and American markets have been slow, with the compound annual growth rate (CAGR) of domestic tractor exports to the United States, Germany, Italy, and France from 2019 to 2023 being -14.5%, -1.0%, -46.9%, and +18.5% respectively, showing significant fluctuations. The development of emerging markets is expected to accelerate, with an emphasis on increasing the market share of domestic brands. Currently, the domestic export market to Brazil is gradually opening up, with high levels of tractor exports to Brazil in 2022-2023. Due to natural disasters, tractor imports into Brazil in the first half of 2024 decreased by 43.8% year-on-year, while domestic tractor exports to Brazil increased by 68.46% to $21 million, showing strong performance. In recent years, leading domestic companies have paid more attention to the Brazilian market, and the future outlook for tractor exports to Brazil is promising. Turkey has a demand for tens of thousands of tractors each year, with a significant increase in tractor imports in 2023. However, the domestic market development for Turkey has just started, with exports totaling less than a million US dollars. The high proportion of large tractor imports in Turkey provides ample space for the export of high-end medium to large tractors from domestic manufacturers. Additionally, India is an important global tractor production hub, contributing significantly to trade surpluses each year. India has early tractor technology development and has been exporting tractors for some time with a clear market positioning, giving the industry a competitive advantage. Risk Warning: Lower-than-expected overseas tractor exports and slower-than-expected market penetration in overseas tractor segment markets for domestic tractor exports.