Chinese OEMs capitalise on dramatic rise in demand for construction equipment in Turkey

That’s one of the main findings from a new report examining the state of the construction equipment market in the country by specialist management consultancy Off-Highway Research.

The report, published in September, has tracked a dramatic increase in sales of machines in Turkey from just 3,328 units in 2019 to a record 18,889 units last year.

The sharp rise in sales has resulted from a rebound following a tough economic and political environment in 2018-19, combined with a major recovery and reconstruction effort after last year’s devastating earthquake in Turkey and Syria. The earthquake, on 6 February 2023, resulted in more than 50,000 people losing their lives, the destruction of an estimated 1.9 million homes, and over three million people displaced.

The prospect of finding funding for all of the estimated US$81.5 billion worth of work necessary to help the region and country recover is uncertain but the recovery effort has nonetheless been sufficient to drive the construction industry to grow by 7.8% alone last year, according to Off-Highway Research.

Huge sales increases

The bulk of sales of new machines have come in three categories: crawler excavators, backhoe loaders, and mini excavators.

Backhoe loader sales shot up by 424% over the 2019-2023 period, while mini excavator sales increased by 554% and crawler excavators recorded the biggest upswing of all, at 746%, according to the report. Overall sales increased by 468% over the period.

But the rapid growth of recent years also serves as a marker of the volatility in the Turkish construction equipment market.

The report notes that sales were at a peak of 12,500 units in 2013, before two brutal years in 2018-19 brought them to a low five years ago.

Sales fell 40% in 2018 and halved again in 2019 before a rapid rebound of 468% across the 2019-2023 period.

A dearth of machines resulting from abnormally low sales levels was compounded by the need of many owners to sell off their existing fleets to survive financially. Up to 50,000 units could have been sold off during that time, with most of those machines being shipped across borders.

Chinese firms capitalise on pent-up demand

That made the market ripe for an upswing in demand and Chinese manufacturers, facing a dramatic fall in sales in their domestic market from 2022 onwards, have been on hand to capitalise on it.

In Turkey, they found a country desperate for machines where existing suppliers were struggling to meet demand due to the speed of growth in other markets and post-covid supply chain challenges. Added to that was the keenness of Turkish customers to buy Stage IIIB machines before the transition to more expensive Stage V- compliant machines from March 2023.

“You ended up with a situation of very low sales of new machines and a hollowed-out population of working machines,” explains the report’s author, Off-Highway Research consultant Paul Howard. “Since then, the economy has improved and political stability has recovered. So we’ve had five years of growth with, very unfortunately, extra demand added by the earthquake at the beginning of last year.”

An excavator prepares land for construction in Istanbul, Turkey (Image: Tishina via AdobeStock - stock.adobe.com)

Crawler excavators have seen the strongest growth of all over the past five years, with the most popular machines in the 19 tonne operating weight and above bracket, Howard says. But there has also been an explosion in mini excavator sales in a country where previously they had struggled to gain a foothold due to their relatively high cost as compared to manual labour. The shift to excavators of all sizes has been spurred by more competitively priced machines from China, in search of new markets, he explains.

“In the past few years, it has been estimated that you could make all of the world’s excavators in the factories of Chinese manufacturers without using any other factory. They’ve got that amount of capacity,” says Howard.

That means that in the face of declining demand at home, Chinese manufacturers have needed to identify new opportunities overseas to keep their vast manufacturing facilities running.

“Chinese manufacturers really started to recognise an opportunity in Turkey from 2019 onwards. The establishment of their distribution arrangements [in Turkey] coincided with soaring demand. There were more machines available on their side and fewer machines available from international suppliers because demand was going very well elsewhere post covid,” he says.

Backhoes still important

It is only a few years since crawler excavators overtook backhoe loaders as the biggest-selling machine type in the country. But even though they no longer occupy the number one slot, they remain an important category, Howard points out.

Growth of crawler excavators, which tend to be at the larger end, has come on top of backhoes rather than as a direct replacement, he says. While backhoe loader sales may eventually start to fall away as the Turkish economy develops further, the process is likely to be a gradual one, he suggests.

As far as the future is concerned, Off-Highway Research forecasts a decline in sales in 2024 to just over 15,000 units, down from the red-hot market of 2023. But, taking “serious caveats” prompted by the volatility of the market into account, its report expects sales to remain above the 15,000-units-per-year mark for the next five years, until 2028.

To obtain a copy of Off-Highway Report’s comprehensive, 209-page report on the Turkish construction equipment market, click here.