Downturn everywhere except China in construction equipment sales. Sharp rebound in 2021

Construction equipment is a cyclical market. The industry featured synchronised global growth from 2016 to 2018 with a market peak in 2018 & 2019. In 2020 a downturn was initially foreseen at -5% in global equipment sales. However, Covid-19 has been accelerating the downturn and -15% in global equipment sales is expected at the end of 2020. Q3 and Q4 of 2020 will be crucial to understand exactly the extent of the downturn this year. In 2021 a sharp rebound is expected.

In the next three years (2021-2024) the decline in global equipment is expected to hit small equipment <10 tonnes, as housebuilding and non-residential building will decrease because of the weak economic environment and confidence.

Mid to large-sized equipment will be less impacted because they are used in infrastructures building, which is benefitting from long- term projects and economic stimulus from government. Infrastructures are usually more resilient than housebuilding and non-residential building.

In Europe the market volume will shrink, though not as steeply as in 2009-2010. The area of Germany, Austria and Switzerland with the Nordic countries will be less impacted than UK-Ireland and southern Europe. In the UK and Ireland it is difficult to predict the extent of the downturn because of Brexit in addition to Covid-19.

China is a different story. In spite of the initial decline of -9% we now foresee a 14% increase in equipment sales for 2020 with a peak to be reached at the end of the year. However, only companies present in China will benefit from the upturn, particularly indigenous OEMs including join ventures and wholly-owned Chinese brands.

Globally Off-Highway Research sees a split between China and everywhere else. Other countries will see equipment sales fall by 15 to 35% in 2020, though the volumes will not be as bad as in 2009/2010. A sharp upturn is expected in 2021.

However, it is difficulty to make predictions because of the high uncertainty and volatile conditions. Leaving 2020 aside, it is evident that in the medium-term, the economy will need continued support of jobs and businesses. For this large, long-term stimulus will be needed from government authorities.