Machinery manufacturer Komatsu (Komatsu) will launch more affordable excavators in Southeast Asia to meet the needs of urban development. The 20-ton medium-sized excavator tailored for residential land development and road construction will be sold in Thailand and Indonesia from April 2021, and will be sold in nearby markets. These products will be produced in Japan or Thailand.

Traditionally, hydraulic excavators of this size are Komatsu's main line, multi-purpose machines capable of handling high-power jobs such as mining, quarrying and logging.

The new models will be equipped with more moderate engine power, and the price will be reduced by 10% to 15%. Komatsu predicts that by fiscal year 2020, its sales of construction, mining and utility equipment in Asia outside of Japan and China will be 129.8 billion yen ($1.24 billion), a year-on-year decrease of 37%. Falling coal prices have restricted demand from Indonesia, a major coal exporter, while the coronavirus pandemic has hit entire businesses. During difficult economic times, construction companies are very sensitive to price performance.

Driven by increased investment in public infrastructure, China’s equipment sales are expected to reach 149.4 billion yen, an increase of 18%.

Stabilize market share

Komatsu is a major player in the Indonesian construction machinery market. Komatsu's machines are proud of their ease of use, durability and comprehensive maintenance services. If sales of new equipment decline, critical maintenance operations will also be affected. Mizuhara Kiyoshi Mizuhara, president of the construction equipment marketing department, said Komatsu is adjusting prices and its product lineup to retain customers and is determined to maintain a 20% market share in Southeast Asia.

In the medium and long term, urban development in Southeast Asia is expected to remain strong. Oxford Economics predicts that by 2030, construction investment there will grow at a rate of 6% per year, reaching US$1 trillion per year.

Other Japanese companies are also taking action to protect their market share. Hitachi Construction Machinery sells previously leased equipment under the Premium Used brand in Southeast Asia, providing warranty and repair history in exchange for a price that is 10% higher than the standard resale price. The company hopes that this will encourage buyers to purchase original parts later.

In Vietnam, the demand for second-hand excavators is particularly strong. The new coronavirus has been brought under control in Vietnam, and sales have increased by about 10% year-on-year.

Sumitomo Construction Machinery will spend 3.5 billion yen to double Indonesia's production capacity to 2500 excavators by 2021. The equipment built there will be sold locally and shipped to Thailand, Malaysia and Myanmar. Editor/Huang Lijun