Rising construction activity due to factors ranging from population growth to increasing industrial output; increased infrastructure spending; and advances in worldwide mining, forestry activity and energy production, supported by a recovery in commodity prices from 2020 lows, are said by Freedonia to be key factors fuelling unit sales.
Freedonia says an increase in replacement sales of global construction equipment, after many operators delayed machinery purchases in 2020; the introduction of newly developed, state-of-the-art construction equipment, which will cost considerably more than predecessors; and rising sales of replacement parts and attachments as the amount of equipment in use worldwide increases, will also boost sector demand.
Outside of China – which had an elevated level of 2020 product sales – Freedonia's Global Construction Machinery report notes that annual growth was slower between 2015 and 2020 (1.3%) and will be noticeably faster through 2025 (5.3%).
Due to the COVID-19 pandemic, Freedonia says most countries experienced declining construction machinery sales in 2020 as economic conditions weakened, international trade decreased, and many currencies depreciated against the US dollar. These nations recorded losses of 5% to 20% in 2020, wiping out a large portion of gains recorded since 2015. However, China proved to be an exception to this trend. A surge in government stimulus spending, coupled with the country mitigating the most significant impacts of the pandemic at a relatively early date, prompted double-digit gains in construction equipment demand and prevented even greater global losses.
However, in the years to 2025, China will underperform most major markets and restrain the average global growth rate, owing largely to Freedonia's strong 2020 performance. "First, growth will occur from a high 2020 base. Second, numerous Chinese operators invested in new equipment and replaced ageing machines in 2020. Most other national markets will record a strong rebound in construction machinery demand through 2025, with particularly strong gains coming during the first part of the forecast period," states Freedonia.
Industry leaders are currently developing the next generation of construction equipment – ranging from alternative fuel trucks and semi-autonomous excavators – which, highlights Freedonia, will be considerably more productive, efficient, and environmentally friendly. Freedonia states that new models will feature a variety of innovative technologies, such as advanced sensors, electric engines, and sophisticated data collection capabilities. For example, Caterpillar offers excavators with technology that calculates real-time payload estimates without swinging to help prevent over- and under-loading trucks. Meanwhile, Komatsu offers dozers with capabilities that enable automatic tilt steering control and automatic spreading of fill material. Freedonia says incorporating such technologies into new models will spur both new and replacement equipment sales and drive-up average construction equipment prices.
The 390-page Global Construction Machinery report by U.S.-based Freedonia features 79 tables and 95 figures. It is now also available in Excel and Powerpoint.