Equipment News

Are we at the bottom yet?

March 7, 2017

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A specialist market intelligence company says that global sales of construction equipment have now sunk as low as they are going to go and are now on the rise again.

Worldwide sales of construction equipment will increase 7% by units in 2017 after several years in decline. That is according to analysts at the UK statistics company Off-Highway Research.

Of course, we should always treat such declarations with a degree of scepticism. The world keeps turning and only a fool would claim to know what the future holds for sure. This time last year, Off-Highway Research said that global unit sales would grow 3.9% in 2016. Then it saw the 2015 market data and changed its forecast to a 3.2% fall in unit sales for 2016. This was closer, but still wrong. In fact sales fell 5% in 2016.

Only six months ago Off-Highway Research said that 2017 would see 5% market growth. Now it is saying 7%. What the actual number will be, no one really knows – the world is just too strange to accurately predict. However, it is still interesting to look at Off-Highway Research’s analysis of the market. If it is right about 7% growth in 2017, that would mean the total number of machines sold would reach 695,142 units worldwide, compared to the 650,133 pieces of equipment sold in 2016, which represented the bottom of the industry’s economic cycle.

In the longer term, the analysts expect solid market growth to reach 810,000 machines being sold in 2020 – a 25% increase in four years – before flattening out again in 2021.

In value terms, Off-Highway Research expects the market to rise by 28% over the same period, with sales increasing from US$69.8 billion in 2016 to US$89.3 billion in 2020. This reflects an expected resurgence in some higher value types of equipment over the coming years, most notably crawler excavators and rigid dump trucks, it says.

David Phillips, managing director of Off-Highway Research, says: “Sales of construction equipment last year were affected by weak economic growth worldwide and low global prices for many commodities. These factors had a knock-on effect for the demand for most types of machinery, particularly equipment used in mining and other extractive industries. However, with commodity prices rising as 2016 went on, sales picked up in a number of key markets.”

Of particular significance this year, he says, is the expected return to growth for the Chinese market, which bottomed-out in 2016 after five years of steeply falling sales. However, even with the 13% rise in sales forecast for 2017, demand in China will still only be 30% of what it was in the boom years of 2010 and 2011.

Meanwhile, the Indian market is forecast to go from strength to strength. Equipment sales grew 40% there in 2016 thanks to increased investment in infrastructure construction.

By contrast, Europe, Japan and North America saw a 3% fall in sales last year. Off-Highway Research expects to see some growth return to Japan and North America in 2017, with Europe staying flat. We shall see.

Worldwide Sales and Forecast Sales of Construction Equipment,

2016-2021 (Units)

	2016	2017*	2018*	2019*	2020*	2021*
China	119,218	134,655	144,380	153,375	161,420	168,750
Europe	140,511	140,430	143,801	141,778	144,495	146,267
India	52,619	59,295	65,770	66,270	69,895	73,470
Japan	59,700	64,245	67,410	74,960	75,460	74,960
North America	158,925	168,600	183,785	199,150	209,910	196,900
Rest of the World	119,160	127,917	136,572	143,511	149,147	149,340
Total	650,133	695,142	741,718	779,044	810,327	809,687
% Change on Previous Year	-5	7	7	5	4	–

* Forecast Source: Off-Highway Research

The types of equipment covered by Off-Highway Research in these forecasts are: articulated dump trucks, asphalt finishers, backhoe loaders, crawler dozers, crawler excavators, crawler loaders, mini excavators, motor graders, rigid dump trucks, rough terrain lift trucks (masted and telescopic handlers), skid-steer loaders, wheeled excavators and wheeled loaders.

Mobile cranes, tower cranes, powered access equipment and non-mechanical equipment are not included.

A separate analysis conducted recently by Off-Highway Research said that mobile crane sales would rise by 5% in 2017, but this would not be enough to make up for the 11% fall seen in 2016. It estimates that sales of telescopic boom mobile cranes was just over 17,000 units in 2016 and about 19,000 in 2015. A 5% rise in 2017 would make total telescopic boom mobile crane sales for the year less than 18,000 units.