Price Difference Between SANY and CAT in the U.S. Excavator Market

Many friends have asked me a question: What is the price difference between SANY excavators and CAT in the U.S. market?

I fully understand this question because the essence of this inquiry is to determine the market position and brand image of companies like SANY and XCMG (XCMG has made significant progress in the U.S. market in recent years, particularly in the loader segment, where it has gained substantial recognition from American customers).

For Chinese construction machinery companies going global, the U.S. market is the most important market, offering the highest potential shareholder returns. This article attempts to analyze this question from a personal perspective. Due to my limitations, my conclusions may be incorrect, and I welcome readers to provide corrections.

To answer this question, I consulted three professionals in the U.S. construction machinery industry—two in California and one in New Jersey. The responses were as follows:

1. In California, SANY excavators are priced similarly to Komatsu excavators, with a 10% price difference compared to CAT.
2. In New Jersey, SANY excavators are even more expensive than Komatsu, with an 8% price difference compared to CAT.

These figures are approximate; actual differences vary based on region and machine model.

Additionally, after reviewing some equipment usage VLOGs from U.S. construction machinery customers, the price differences mentioned fall within this range. XCMG's products are priced slightly lower—for example, loaders have a 15%-20% price difference compared to CAT.

But does this mean that SANY and XCMG have already surpassed Komatsu in brand image in the U.S. and are closing in on CAT? No, that is not the real answer. Below, I will break down the real factors behind market pricing from two key perspectives.

1.Nominal Price vs. Residual Value

For any durable consumer or capital good, residual value is a key consideration for buyers. In simple terms, residual value affects the total cost of ownership over the equipment’s lifecycle. However, after interviewing many construction machinery users in both China and overseas, I found that this perspective is not entirely accurate.

Construction machinery users are not financial accountants meticulously calculating returns. In reality, hidden costs exist during operations, and most buyers do not explicitly calculate total lifecycle costs. Instead, residual value is crucial because it helps manage customer expectations.

One reason people buy Apple smartphones is that they retain value well. Similarly, Toyota cars are popular partly because of their strong resale value. However, customers generally have only a vague sense of this value rather than precise calculations. This is a form of expectation management rather than a numerical evaluation.

Expectation management must ultimately be self-fulfilling to be effective. So, what is the most significant factor influencing expected residual values?

The nominal price of new machines.

The pricing structure of Apple products—$699, $799, $899—ensures stability, while the budget-friendly iPhone C series was quickly abandoned by the company. A recent example from the automotive industry: BMW chose to raise prices despite losing market share.

The same logic applies to construction machinery:

• CAT holds only about 5% of the new excavator market share, yet in the used market, it dominates. My grassroots research suggests that in some markets, CAT’s used excavator market share exceeds 30%.
• Liebherr sells only a few cranes in China each year, but its used cranes still command high prices.
• An extreme case: the now-defunct Putzmeister concrete pump brand. Despite no longer being sold in China, a second-hand pump dealer told me that he struggles to find inventory because refurbished Putzmeister pumps sell so well—even models from over a decade ago.

This underscores the unique appeal of the used equipment market. Brands that maintain a significant gap between new and used equipment prices preserve strong residual value.

Thus, maintaining high nominal prices is crucial—it reinforces consumer expectations. This is why Chinese manufacturers entering the U.S. market must sustain a high nominal price. This is a strategic decision rather than a reflection of actual market position. Whether selling 50 or 5,000 units, the pricing structure remains the same.

2.Mechanisms Behind Real Prices

In reality, the actual price of Chinese brands in the U.S. market varies by around 30% due to three primary factors:

1. Interest Rates
   During the financing stage, interest-free or low-interest leasing can offset new machine costs. However, this is difficult to quantify since rates fluctuate based on region, time, and model. CAT also offers zero-interest financing for certain models for up to three years. Thus, the net difference here is roughly zero.

2. Warranty
   CAT and Komatsu offer a 2-year warranty in the U.S., whereas SANY and XCMG provide 5-6 years.
   This translates to an approximate price difference: CAT can offer a 5-year warranty, but at an additional cost. Customers can opt for CAT's Extended Protection Plan (EPP), with tiered pricing:

   • 3 years: 3.5%
   • 4 years: 4.5%
   • 5-6 years: around 9%

   This results in an 8% price gap.

3. Configuration
   CAT machines in the U.S. often require additional paid options. For example:

   • Buckets are sold separately.
   • Rollover Protective Structure (ROPS) and quick coupler auxiliary valves must be purchased separately.

   Meanwhile, Chinese brands sell fully loaded models as standard.
   This creates a price gap of roughly 10-15%.

4. Final Price Difference
5. New machine price difference: 8-10%
6. Warranty difference: 8%
7. Configuration difference: 10-15%

This means that the actual price gap between Chinese brands and CAT in the U.S. market is around 30%.

Although these figures are estimates, I am confident in the conclusion. When Komatsu first entered the U.S. market, its pricing was approximately 70% of CAT’s—similar to the positioning of Chinese brands today.

3.Final Conclusions

Returning to the original question, the price gap itself is not important. What matters is: where do Chinese brands stand in the U.S. construction machinery market?

Based on Komatsu’s trajectory, once a brand gains widespread recognition in the U.S., growth can be rapid. In the 1980s, Komatsu’s market share in the U.S. jumped from single digits to nearly 30% within just three years.

Thus, the key is identifying the inflection point for market breakout. This can be assessed through:

• New machine pricing
• Warranty period
• Configuration

New machine prices will likely remain stable. CAT’s 10% premium is due to brand equity, not quality or reliability. CAT is the global leader in construction machinery, with deep emotional ties to American customers. This price gap will persist.

Configuration is also unlikely to change, as it ties into brand positioning and customer expectations.

The most probable adjustment is in warranty duration.

In the electric vehicle industry, NIO initially offered free battery swapping but later introduced fees—while maintaining premium configurations.

Thus, the key indicators to watch are:

1. Nominal prices will remain high to maintain customer expectations.
2. Chinese brands are still in the early stages of market penetration.
3. If warranty periods shrink from 5 to 4 years, it signals strong progress; a drop to 2 years would indicate true mainstream acceptance.

This is my analysis and response to the question many have asked.