SNAPSHOT: Economic Forum

THE GLOBAL OUTLOOK FOR THE CONSTRUCTION EQUIPMENT MARKET

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According to Chris Sleight from Off-Highway Research, the global market for construction equipment reached a historical peak in 2018, with 1.1 million units sold. Alongside this, the global value of construction equipment sales was worth $110 billion in 2018. Starting in 2019, a modest decline in sales is expected at a global level until 2021, after which the next phase of growth is expected to begin.

Looking at the major regional markets, it is interesting to note that all have been on a growth path since 2016, except Japan, where sales showed a modest fall in 2018. Equipment sales in China represented one third of the global market in 2018, with almost 340,000 machines sold. Second to this, North American sales reached approximately 190,000 machines in 2018. Sales in the European market were 175,000 units, India reached 85,000 units and Japan 65,000 units.

Growth in equipment sales in the European market began in 2013. After reaching a peak in 2018, a slight decline is expected in 2019, and further falls in sales are expected until 2022.

However, the reduction in sales is forecast to be moderate, falling from 175,000 units in 2018 to 160,000 units in 2022, a fall of only 9% over four years. Looking at the pattern of sales within the EU market, countries in the northern region have reached a peak, while in contrast, further growth is expected in the southern region, albeit absolute sales volumes remain at relatively low levels in these countries.

The North American market is forecast to continue its growth until 2022, when sales are forecast to reach a peak level of 240,000 machines. Following this, a modest decline is expected in 2023 to around 225,000 machines. There are uncertainties which cast some doubts over this forecast, including internal politics, but strong investment in construction and infrastructure is continuing to act as a driver for the construction equipment market.

The Chinese market experienced a severe downturn in 2015, when sales fell to less than 140,000 machines, a fall of 40% on the previous year. Even more dramatic, is the comparison with the peak level of sales reached in 2011 at 475,000 machines. However, since 2016 China has been on a steady recovery path which has led to the latest peak in 2018. In 2019-2021, a declining trend is expected, before the market is forecast to return to growth in 2022. Exports of construction equipment from China remain significant, especially to emerging markets. In 2018, 85,000 machines were exported, which represented 20% of total machine production.

India reached a historical peak level of sales in 2018, at nearly 85,000 machines.  In 2019, a modest fall to around 80,000 units is forecast, due primarily to the uncertainty caused by the election. However, from 2020, growth in sales is expected to resume, and according to Off-Highway Research, should achieve a record level of 115,000 machines in 2023. India is also emerging as a regional export hub, similar to China.