HD Hyundai Group's construction machinery subsidiaries are accelerating their efforts to target the Brazilian market. This is because growth in North America and Europe is slowing, and sales from China are decreasing. Brazil is a highly profitable market due to the high demand for high-value excavators used in large-scale facility investments and mining. HD Hyundai Construction Equipment plans to expand its sales channels throughout South America based in Brazil.
According to industry sources on the 5th, HD Hyundai Construction Equipment's sales in Brazil during the first quarter of this year totaled 334 units, a 9.5% increase compared to the same period last year (305 units). The increase in sales is primarily from mid-sized excavators, such as those weighing 15 tons (t) and 22t, along with rising demand for small wheel loaders.
The operating rate of HD Hyundai Construction Equipment's factory in Brazil and the revenue of its Brazilian subsidiary are also on the rise. The factory's operational rate increased to 32.4% in the first quarter of this year, up 5.9 percentage points (P) from the same period last year (26.5%). Revenue for the Brazilian subsidiary rose from 46.2 billion won last year to 50.1 billion won this year.
HD Hyundai Construction Equipment shifted its focus to North America and Europe starting in 2022, but is experiencing a trend of declining orders after peaking in 2023. Sales in China, its largest market, have decreased since COVID-19. Increases in sales in Brazil and India are offsetting declines in North America, Europe, and China.
Official market share data for the Brazilian market is not compiled. HD Hyundai Construction Equipment estimates its market share to be around 10% (ranking 2nd to 3rd). The largest player is estimated to be the American company Caterpillar. Last year, HD Hyundai Construction Equipment aimed to increase its market share in Brazil from 9% and expanded its product range beyond excavators to include backhoe loaders and motor graders. A backhoe loader is a type of construction equipment that combines a loader in the front and an excavator in the back.
HD Hyundai Construction Equipment and HD Hyundai Infracore are pursuing a merger under the name 'HD Construction Equipment' effective January 1 next year. The two companies hope to expand their sales channels following the merger. HD Hyundai Infracore, which sells 'Dibellon,' currently has no subsidiary in Brazil, but after the merger, production of Dibellon at HD Hyundai Construction Equipment's factory in Brazil will be possible. Until now, products from HD Hyundai Infracore were imported to Brazil and sold under HD Hyundai Construction Equipment's 'Hyundai' brand.
An industry insider noted, 'Local bases serve as a supply chain that can reduce logistics expenses and delivery times. The presence or absence of local subsidiaries and factories significantly impacts market share.'
HD Hyundai Construction Equipment plans to expand its product range in Brazil to include not only mid-sized excavators and wheel loaders but also highly profitable large excavators.