Soochow: Forklift sales in December 2024 increased by 12% year-on-year, with exports driving the growth.

Soochow released a research report stating that the forklift industry's sales in 2024 are expected to reach 1.29 million units, an increase of 10% compared to the previous year. Of this, domestic sales in China are expected to reach 810,000 units, a 5% increase, while export sales are expected to reach 480,000 units, a 19% increase. Since the end of September 2024, the intensity of counter-cyclical adjustments in macroeconomic policies has increased, with monetary and fiscal policies gradually taking effect. In addition, the "two heavy" and "two new" policies for 2025 are expected to further expand to support the comprehensive expansion of domestic demand and promote a sustained recovery and improvement in the economy. In the third quarter of 2024, leading forklift companies Toyota and KION both reported declines in new orders compared to the previous year, but the decrease has narrowed or turned positive, indicating stabilization in demand. In the fourth quarter of 2024, domestic raw material prices remain low and fluctuating, while overseas income growth is passive and increasing, suggesting that forklift companies' profit margins are expected to remain at relatively high levels. Key points from Soochow research report are as follows: In December, forklift sales, both domestic and export, are expected to increase by 10% and 15% respectively. In December 2024, total forklift industry sales reached 111,000 units, a 12% increase compared to the previous year. Of this, domestic sales in China reached 67,000 units, a 10% increase year-on-year and an 11% increase month-on-month, while export sales reached 44,000 units, a 15% increase year-on-year but a 0.3% decrease month-on-month. With the implementation of counter-cyclical adjustment policies, the growth rate of domestic sales in December saw some recovery, while exports continued to grow. The PMI for December was 50.1%, a decrease of 0.2 percentage points month-on-month, with the logistics industry index at 53.1%, an increase of 0.3 percentage points, and the warehousing index at 50.6%, a decrease of 1.8 percentage points, all of which remain in the expansion zone. For the full year 2024, total forklift industry sales are projected to reach 1.29 million units, a 10% increase compared to the previous year. Of this, domestic sales in China are expected to reach 810,000 units, a 5% increase, while export sales are expected to reach 480,000 units, a 19% increase. The counter-cyclical adjustment policies implemented since the end of September 2024, along with the gradual implementation of monetary and fiscal policies, and the expansion of the "two heavy" and "two new" policies for 2025, are expected to support the comprehensive expansion of domestic demand and promote a sustained recovery and improvement in the economy. The forklift industry's business climate, progress in electrification transformation, and overall economic activity in manufacturing and logistics industries are closely linked, and a trend towards recovery in domestic demand can be expected in the future. Benefiting from a optimized product structure, the sector's performance growth remains stable. The forklift sector maintained steady growth in performance in the first three quarters of 2024. On the revenue side, due to the decline in the business climate of the domestic manufacturing industry and reduced demand for large forklifts, the growth rate slowed down. However, on the profit side, the sector benefited from high-profit margin overseas businesses and an increase in the proportion of electric vehicles, leading to a significant increase in profitability compared to revenue. In the first three quarters of 2024, the forklift sector achieved a revenue of 31.3 billion yuan, a 1% increase year-on-year, with a net profit attributable to shareholders of 3.04 billion yuan, an increase of 15% year-on-year. The sector's gross profit margin for the first three quarters of 2024 was 22.3%, an increase of 1.9 percentage points year-on-year, while the net profit margin was 10.2%, an increase of 1.1 percentage points year-on-year. The sector's profitability improved year-on-year due to high-profit margin overseas business (the difference in domestic and overseas profit margins for each company is about 6-9 percentage points), the increase in the proportion of electric large forklifts, and a year-on-year decline in raw material prices such as steel. Expectations of domestic policy advancement and overseas channel inventory digestion leading to demand recovery in the future. The demand in the forklift industry is driven by the growth in investment in the manufacturing and logistics industries, leading to an increase in demand for handling equipment, as well as the rising cost of labor and higher efficiency requirements in factories and warehouses, driving the trend towards machine replacement for manual labor. The global CAGR for forklift sales from 2014 to 2023 was 7%, with domestic and overseas CAGRs of 13% and 4% respectively. In the short term, the domestic business climate in the industry has bottomed out, with annual sales expected to reach 800,000 units, driven mainly by the replacement demand for existing stock. Overseas demand is weak, with the growth rate of new orders in the industry having declined for over two years (2022-2024), especially in the US market. In the third quarter of 2024, leading companies Toyota and KION reported a decrease of 3% and an increase of 2% in new orders respectively compared to the previous year, indicating stabilization in demand. In the fourth quarter of 2024, domestic raw material prices remained low and fluctuating, while overseas income grew passively, leading to an increase in profitability for forklift companies. In the medium to long term, there is still room for improvement in the electrification rate of forklifts both domestically and overseas, aiding in structural optimization and overseas expansion. In 2023, the domestic and overseas electrification rates (the proportion of lithium-balanced forklifts in the total forklifts) were 19% and 13% respectively, indicating vast room for improvement. There are concerns in the market regarding the risk of US tariffs; however, the US market accounts for approximately 12% of global sales and 18% of the size, and with weaker demand for electric vehicles compared to Europe, the impact on the leading companies' revenue from the US market is less than 10%, and thus manageable. Additionally, as forklifts sold overseas starting from 2021 age, the aftermarket services will take over to create new growth points in sales. Risk warning: deterioration in industry competition, geopolitical conflicts, fluctuations in raw material prices.