Indian construction equipment market - A report

Indian Construction Equipment Market Light at the end of Tunnel

Samir Bansal, General Manager, Off-Highway Research, India

Indian Construction Equipment

The Indian construction equipment market has been volatile for the last few years. After an unprecedented four-fold growth in four years since 2003, the construction equipment demand in India exceeded 50,000 units for the first time in 2007, but declined by nine per cent in 2008 in the wake of the global economic crisis and witnessed a further drop of 11% in 2009.

Construction Equipment Sales
The market recovered strongly with a growth of 45% in 2010 and 22% in 2011, when it peaked at 72,197 units. However, limited access to long-term finance, high inflation, delays in policy decisions and statutory clearances for infrastructure projects adversely affected the sales leading to a market declined by eight per cent in 2012 and a further 15% drop in 2013 to settle at 55,946 units.

In terms of the number of units sold, the Indian construction equipment market is dominated by six machine types. Of these, backhoe loaders, crawler excavators and mobile cranes together accounted for 78% of total market in 2013 against 74% in 2008. While the combined share of mobile compressors, compaction equipment and wheeled loaders decreased from 19% in 2009 to 18% in 2013, the share of remaining equipment declined from seven per cent in 2009 to five per cent in 2013.

The market structure has remained more or less unchanged for the past five years, but vast differences are noticeable while evaluating the performance of individual products. The share of the most popular product, backhoe loaders, grew from 38% in 2009 to 50% in 2013, while crawler excavators, considered to be the most important machine for infrastructure building, declined from 20 to 18% during the same period.

Share Construction Equipment

Mobile compressor was another equipment that improved its contribution from seven to nine per cent. The share of balance equipment declined with mobile cranes dropping from 16 to 10%, compaction equipment from seven to five per cent, wheeled loaders from five to three per cent and other equipment from seven to five per cent.

Off-Highway Research forecasts the crawler excavator to be the fastest growing equipment type, which will account for 29% of the market in 2018. Backhoe loader will continue to be the most popular equipment, but its share will decline to 39% and that of mobile compressors to seven per cent. No change is expected in the contribution of mobile cranes and compaction equipment, while some growth is projected in the shares of wheeled loaders and other equipment.

The current state of the market can be summarised as follows:

Of the six major machine types that dominate the market, sales of four products declined in 2013, one remained almost flat while the sixth showed an upward movement. Their cumulative sales fell by 17% in 2013, while the combined sales of the remaining machines increased by 10%.

The Winners: The market for ten equipment types declined in 2013, while six equipment types recorded gains. The highest growth was noticed in rigid dump trucks, which grew by 45%, followed by mini excavators at 24%, mobile compressors at 13% and skid steer loaders at 11% while asphalt finishers increased marginally. 10 units of articulated dump trucks were sold in 2013 against no sales recorded in 2012.

The Losers: Among the losers in the market for major equipment types, mobile cranes declined by 32%, crawler excavators by 26% and backhoe loaders by 14% in 2013. Wheeled loaders fell by six per cent and crawler dozers by three per cent and motor grader sales declined by 13 per cent. Crawler loaders, wheeled excavators and RTLTs recorded a 67, 42 and 11% drop respectively but on insignificant sales volumes.

Construction Equipment Forecast

Although the Indian economy has shown lower than expected growth in the last two financial years, the situation is predicted to improve in the future. Major challenges for the construction equipment market did arise from delays in policy decisions, which are often set aside as the government struggles with a wide number of social and political issues on a daily basis. Major non financial constraints include problems related to land acquisition, and procedural and approval delays, especially for environment and forest clearances.

The government has been slow in reforming its regulatory and administrative structure, and this has resulted in the on-going gap between the planning and execution of all infrastructure projects. The continual allegations of corruption charges being faced by several political leaders, and the incoherence within the ruling coalition on development issues, hampered decision making at every level in the government.

Display of equipment for private treaty transaction

Other challenges mainly come from the widening current account and fiscal deficits, though the government in its interim budget presented in February 2014 did try to address these issues. The Reserve Bank of India is pursuing its high interest rate regime that was put in place to tame inflation during 2010-2012, but the new government, expected to be in place by the end of May 2014, may have a second look at this policy.

Some infrastructure projects were cleared recently on an adhoc basis, but it is expected that after the general election, scheduled during April-May 2014, the situation may turn favourable for infrastructure growth. In the long-term, it is understood that the government's obligation to bridge the massive infrastructure deficit in the country will outweigh all other unfavourable factors, hence despite this prevailing uncertainty, most construction equipment suppliers are optimistic about the future growth.

Off Highway Research

Off-Highway Research is bullish about the future growth of the construction equipment industry in view of the high potential that exists in the country. The simple truth is that there is a massive amount of work to be done in every sector, and this will call for large volumes of equipment to complete it. How large those volumes will be is totally dependent on government's effectiveness in facilitating project execution and addressing the key impediments highlighted above.

The market for construction equipment is forecast to grow by around eight per cent in 2014 and witness a higher 10-14% expansion during 2015-2018. The demand is expected to grow to 60,655 units in 2014, and reach 96,730 units by 2018.

Almost all types of equipment will witness growth, though the market will continue to be dominated by the six most popular products: backhoe loaders, crawler excavators, mobile cranes, mobile compressors, compaction equipment and wheeled loaders. Together these will account for 94% of the market in 2018.

Importantly, demand for equipment that has sold only in small numbers in the past, such as mini excavators, rough terrain lift trucks and skid-steer loaders, may also increase considerably. The demand for less frequently purchased equipment such as articulated dump trucks, crawler loaders and wheeled excavators will be driven by specific orders and no future pattern can be predicted for them with any degree of certainty at this point in time.

NBMCW May 2014

Click Here
To Know More / Contact The Manufacturer
Please fill in your details, we will contact you as soon as possible
Choose Title from the listPlease let us know your name.
Please let us know your Designation.
Invalid Input
Please let us know your email address.
Please let us know your City.
Please let us know your Contact Number.
Please brief your query.
Our other value-added services:

To receive updates through e-mail on Products, New Technologies & Equipment, please select the Product Category(s) you are interested in and click 'Submit'. This will help you save time plus you will get the best price quotations from many manufacturers, which you can then evaluate and negotiate.

Equipment & Machinery
Invalid Input
Building Products
Invalid Input

Komatsu, L&T and Scania display technological strengths and service capabilities

Komatsu India and Larsen & Toubro put up an impressive show to showcase their technological strengths and service capabilities and reaffirm their strong commitment to the industry. The show witnessed Komatsu, Scania and LTCEL Read More ...

SANY launches new product line

Sany unveiled over 12 new products and displayed their existing range of construction machines, popular all over the globe for their technologically advanced design, ease of operation and reliability. Their stall displayed Read More ...

Fayat: Growing Presence in India

French road equipment manufacturer Fayat is set to gain a stronger presence in the Indian market with a wider range of offerings following its recent acquisition of Dynapac from Atlas Copco. Jean-Claude Fayat Read More ...

Growing Productivity Demand Driving Advancements in Motor Graders

The continued upsurge in road construction projects is sustaining demand for Motor Graders characterized by economic feasibility in owning and operating them in the mega national and state highways and rural Read More ...

Innovations in Asphalt Pavers and Compactors

The road surface preparation market is witnessing a slew of new equipment with advanced features as equipment manufacturers vie with each other to meet the contractors’ requirement for speedy and quality road Read More ...

Indian Excavator manufacturers enhancing their products and services

The surge in road construction, and increased activities in quarrying and irrigation projects, is projected to pull demand to more than 25,000 units of excavators up till December 2018, according to industry estimates. Read More ...

Wheel Loaders Seeing Stronger Demand

The market for wheel loaders is seeing fresh traction due to the buoyancy in road construction activities. Fresh off take of coal due to a surge in thermal power production is adding to the demand. Users Read More ...

Motor Graders: Manufacturers Continue With Business Dexterity

In a buoyant market, Motor Graders, manufacturers are offering higher capacity machines to meet demand for higher productivity, and enable owners earn better profit margins, especially with project completion Read More ...

Backhoe Loaders - Enhancing productivity with more features

Traditionally, backhoe loaders in India have been finding usage in infrastructure construction as base machines for carrying out digging work. But with newer application requirements. Read More ...

Road Equipment - Manufacturers Strengthen Service & Support System

The construction targets set by the Union Ministry of Highways for three years, have been keeping manufacturers of road construction equipment very busy, with demand outstripping supply Read More ...

German construction equipment and building material machinery well on track: Strong plus in India

Germany is known globally for its engineering technology. The German manufacturers are internationally well positioned with their broad range of sectors: In 23 out of 31 comparable sectors Read More ...

Indian Construction Equipment Sector - Progressing with some hits and misses

The first decade of the 20th century has been a golden period for the equipment sector, as the industry enjoyed unprecedented growth during 2004 to 2011. If one recalls, in 2010/11, it began to appear Read More ...

Mobilising Pavers Market

Paver manufacturers are offering a wealth of asphalt and concrete laying and composition solutions, and covering the entire product value chain. P.P. Basistha takes a look at the brands offering in Read More ...

Motor Grader Manufacturers Work Out Finely Graded Business Strategies

Large scale expansion of road network has given a shot in the arm to motor grader manufacturers (barring the present aberration as a fallout of GST). According to industry estimates, the market Read More ...

Asphalt Batch Mix Plants Manufacturers Improve on Cost-efficiency & Offerings

Asphalt batch mix plant manufacturers are carrying out product improvisations to minimize owning and operating cost. P.P. Basistha takes a look at the recent advancements. The demand for Read More ...

Wheel Loaders Manufacturers count on products and service advancements for pushing sales

Wheel loaders business have been witnessing modest levels of recovery during the past few months. The recovery is likely to gain momentum with the off take of fresh units improving, led by rising demand Read More ...
NBM&CW

New Building Material & Construction World

New Building Material & Construction World
MGS Architecture

Modern Green Structures & Architecture

Modern Green Structures & Architecture
L&ST

Lifting & Specialized Transport

Lifting & Specialized Transport
II&TW

Indian Infrastructure & Tenders Week

Indian Infrastructure & Tenders Week