Global equipment market up 38% in next two years despite current slowdown

Experts expect the next two-year period, 2017-2018, to be positive for the global construction equipment market, with sales of 863 000 units in 2018 possible, a variation of +38% compared with 2016.

The first nine months of 2016 saw global earthmoving equipment sales of 496 500, translating to 5 000 less (-1%) compared with the same period in 2015. The setback was particularly in the first quarter, while there was better overall stability in following months. The period January-September saw performances in emerging markets stand out, with China (+8%) and India (+31%), and a good result in Western Europe (+11%). Setbacks were seen in North America (-3%) and Japan (-24%).

This is according to the SaMoTer-Veronafiere Outlook, the construction sector observatory developed in partnership with Prometeia – the international economic consulting and research company – with the support of Unacea, the Italian Association of construction machinery and equipment builders. For the period January-August, France (+42%) and Italy (+32%) achieved double-figure growth in sales; Belgium (+14%), Germany (+14%) and Spain (+10%) all performed well. The United Kingdom posted a downturn of -12% in the wake of Brexit.

With growth in 11 consecutive quarters, Italy has consolidated its recovery, but still has to recoup losses in a sector that, following the economic crisis in 2008, shrank by more than 80%. Sales in Italy especially involved mini excavators and telehandlers. This trend is also reflected on a global scale, with world-wide sales of mini excavators up by 5% for a 23% share of the market, close behind crawler excavators (24%).

The forecasts developed by the Prometeia Study Centre for the SaMoTer-Veronafiere Outlook indicate a slight recovery (+2%) in the last quarter of 2016, which should settle global sales of earthmoving machinery at 625 700 units (-0,4%). This market stagnation is also the outcome of downsized investments in the construction sector and, consequently, the propensity to buy new machinery.

At the end of the year, Western Europe will make the most significant contribution to world demand for machinery and technologies, climbing back to a 26,6% share of the world market after the rock bottom figure of 18,8% posted in 2010. After five years of setback, even China’s share of the market began improving again and should close the year at 13,6%, albeit still far below the 35% peak posted in 2010.

Forecasts for the two-year period 2017-2018

The report suggests that the next two-year period will be positive for world-wide sales of construction equipment, with a resumed investment propensity by companies more in line with the historical average: a trend that should make sales of 863 000 units in 2018 possible, with a variation of +38% over 2016. In this two-year period, emerging markets should see Latin America (+61%), Central and Eastern Europe (+55%), India (+33%) and China (+27%) come to the fore. “Mature” markets can expect some growth, such as Japan (+57%), North America (+53%) and Western Europe (+12%).

Trends on the construction market are directly related to the earthmoving machinery field and 2016 is expected to see the rate of expansion settle at about 2%. Over the next two years (2017-2018), the SaMoTer-Veronafiere Outlook estimates dynamic investments likely to achieve a growth rate of more than 3%, driven to a large extent by India.

The situation in the United States is very dynamic, with the new Trump Presidency with plans for major infrastructure investments amounting to USD1-trillion, which may well stimulate even more expansion. There are good prospects between 2017 and 2018 for Central Europe thanks to the residential segment and civil engineering works linked with EU funds. Russia will gradually emerge from the recession, driven by new infrastructure construction sites, while China will see a slowdown in construction in the wake of credit bubble risks.

Equipment Africa says: One of the key trends to drive home from this report is the continued growth of the mini excavator, which many believe is the next big thing in the global construction equipment space. This trend is well illustrated by global sales of mini excavators being up by 5% for a 23% share of the market, closely behind crawler excavators (24%).

Review overview