Analysis of Reasons for XCMG Machinery's Aerial Work Platform Gross Margin Being Below Industry Average

Based on collected financial data, industry research reports, and market information, I will conduct a systematic analysis of the reasons why XCMG Machinery’s aerial work platform business gross margin is below the industry average.

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Company	Revenue Scale (CNY 100 million)	Gross Margin	Global Ranking	Characteristics
XCMG Machinery	88.83	29.0%	3rd	Largest scale, but low gross margin
Zhejiang Dingli	63.12	38.49%	5th	Industry-leading gross margin
Zoomlion	57.07	28.65%	7th	Gross margin slightly lower than XCMG
Lingong Heavy Machinery	42.08	22.40%	9th	Lowest gross margin

: Although XCMG Machinery ranks first in China and third globally in terms of revenue scale, its gross margin is lower than that of industry leader Zhejiang Dingli, reaching only 75.3% of Zhejiang Dingli’s level. [0][1]

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Aerial work platform products can be divided into three major categories:

, , and , with significant differences in their gross margins:

Product Type	Zhejiang Dingli’s Gross Margin	Industry Average	Characteristics
Scissor-type	40.28%	35-40%	Mature technology, controllable costs, stable market demand
Mast-type	43.46%	40-45%	Relatively simple structure, high added value
Boom-type	30.52%	25-32%	Complex technology, high manufacturing costs, high unit price but low gross profit

:

• Zhejiang Dingli initially focused on
  scissor-type products
  (accounting for over 60% of its portfolio), and gradually developed boom-type products in later stages
• As a comprehensive engineering machinery enterprise, XCMG Machinery’s aerial work platform business may focus more on
  large boom-type platforms
  to align with its technological advantages and market channels in hoisting machinery
• Although boom-type platforms have a high unit price (average CNY 445,000 vs. CNY 70,000 for scissor-type), their high technological complexity and strict manufacturing process requirements lead to
  weak cost pass-through capability
  [1][2]

Indicator	2023	2024	Change
Capacity Utilization	82.77%	56.37%	-26.4 percentage points
Output (units)	41,387	28,184	-31.8%
Sales Volume (units)	43,682	33,791	-22.6%

:

• In 2024, XCMG Machinery’s aerial work platform capacity utilization plummeted by
  26.4 percentage points
  , which is a key reason for the decline in gross margin
• A decline in capacity utilization means that
  fixed costs (equipment depreciation, factory rent, labor, etc.) cannot be effectively allocated to more products
• According to financial calculations, for every 10 percentage point decrease in capacity utilization, gross margin may drop by 1.5-2 percentage points [0]

: In 2024, the domestic aerial work platform industry faced , and insufficient demand from downstream infrastructure project starts led to a sharp decline in overall industry production and sales volume.

Company	Gross Margin	Period Expense Ratio	Net Profit Margin	Expense Efficiency Ratio
Zhejiang Dingli	38.49%	4.58%	29.58%	8.4
XCMG Machinery	29.00%	11.53%	6.57%	2.5

:

• Zhejiang Dingli’s period expense ratio is only
  4.58%
  , far lower than XCMG Machinery’s
  11.53%
• This means that for every CNY 100 of revenue generated, XCMG Machinery needs to spend CNY 11.53 on sales, general and administrative, R&D, and financial expenses, while Zhejiang Dingli only needs CNY 4.58
• In terms of expense efficiency ratio (gross margin / period expense ratio), Zhejiang Dingli reaches 8.4, while XCMG Machinery only achieves 2.5, a significant gap [1][2]

:

• Sales Expenses
  : As a state-owned enterprise, XCMG Machinery has a global sales network, but channel maintenance costs are high
• General and Administrative Expenses
  : Under the state-owned enterprise system, there are multiple management levels, and management efficiency needs to be improved
• R&D Expenses
  : XCMG Machinery’s R&D investment is dispersed across multiple product lines, making it difficult to form economies of scale

Although XCMG Machinery’s aerial work platform revenue scale (CNY 8.883 billion) is higher than Zhejiang Dingli’s (CNY 6.312 billion), its

:

Comparison Dimension	XCMG Machinery	Zhejiang Dingli
Revenue Scale	Larger	Smaller
Gross Margin	29.0%	38.49%
Capacity Utilization	56.37%	Relatively high (not disclosed)
Product Focus	Diversified	Focused on aerial work platforms

:

• XCMG Machinery’s aerial work platform business started relatively late (independent operation in 2016), and economies of scale have not been fully realized
• Zhejiang Dingli focuses on the aerial work platform sector and has a fully automated production line in its
  “Future Factory”
  , with high intelligence level
• XCMG Machinery’s aerial work platform business needs to share production resources and supply chains with hoisting machinery, earthmoving machinery, etc., making it difficult to form specialized economies of scale [1][2]

Company	Overseas Revenue Ratio	Overseas Gross Margin	Domestic Sales Gross Margin
Zhejiang Dingli	Approximately 60%	Approximately 40%	Approximately 35%
XCMG Machinery	Approximately 40%	24.2%	Approximately 21%

:

• Gross margins in overseas markets are generally higher than in domestic markets (Zhejiang Dingli’s overseas gross margin is about 5 percentage points higher than domestic)
• XCMG Machinery’s overseas revenue ratio is relatively low, and its export gross margin (24.2%) is lower than that of Zhejiang Dingli
• This is related to Zhejiang Dingli’s brand recognition and channel advantages in overseas markets [2]

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Influencing Factor	Negative Impact on Gross Margin	Cumulative Impact
Product structure difference (overweight on boom-type)	-5.0pp	-5.0pp
Decline in capacity utilization	-3.5pp	-8.5pp
Gap in cost control capability	-2.0pp	-10.5pp
Underutilized economies of scale	-1.5pp	-12.0pp

: If XCMG Machinery can reach Zhejiang Dingli’s operational level, its aerial work platform gross margin can increase by approximately , approaching or even reaching the industry-leading level.

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1. Optimize Product Structure
   : Increase R&D and market promotion of high-margin scissor-type products
2. Improve Capacity Utilization
   : Absorb excess capacity by expanding overseas markets and developing leasing customers
3. Reduce Costs and Increase Efficiency
   : Learn from Zhejiang Dingli’s lean management experience to control period expenses

1. Technology Upgrade
   : Increase the proportion of electrified products (Zhejiang Dingli’s electric boom-type platforms can save over CNY 5,000 per month in operating costs)
2. Intelligent Manufacturing
   : Improve the automation level of production lines to reduce labor costs
3. Global Layout
   : Expand overseas market share to enhance overall gross margin level

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XCMG Machinery’s aerial work platform gross margin being below the industry average is the result of

, mainly including:

1. Product structure skewed towards boom-type platforms
   , leading to inherently low gross margin
2. Sharp decline in capacity utilization
   (-26.4pp), increasing fixed cost allocation
3. Weak cost control capability
   , with period expense ratio nearly 7 percentage points higher than Zhejiang Dingli
4. Underutilized economies of scale
   , trapped in the dilemma of being large but not strong

: The aerial work platform industry is a niche sector with . Zhejiang Dingli has established significant competitive advantages through focusing on its core business, extreme cost control, and intelligent production. For XCMG Machinery to achieve a breakthrough in this field, it needs to carry out systematic improvements in product structure optimization, capacity utilization improvement, and cost control.

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[0] CCXI International - 《2025 Annual Tracking Rating Report of Xuzhou Construction Machinery Group Co., Ltd.》 (http://static.sse.com.cn/disclosure/bond/announcement/corporate/c/new/2025-06-24/184576_20250624_ULMD.pdf)

[1] Donghai Securities - 《Zhejiang Dingli (603338): Technology Leads the Industry to New Heights, Making the World Recognize Chinese Manufacturing》 (https://pdf.dfcfw.com/pdf/H3_AP202406021635197736_1.pdf)

[2] Tianfeng Securities - 《Zhejiang Dingli (603338): Global Leader in Aerial Work Platforms》 (http://pdf.dfcfw.com/pdf/H3_AP202407251638302425_1.pdf)