A rapidly growing population and a subsequently rising demand for food has put pressure on farmers to equip themselves with the latest and advanced mechanized farming techniques. Source: AFDJ eNews, PRWire
This has resulted in the increased demand for farm tractors in North America and Europe according to a report by Transparency Market Research (TMR).
The market is also supported by favorable government policies encouraging the usage as well as purchase of agro machinery and various farming equipment.
Easy access to credit provided by country-specific governments in these two regions has benefited the adoption of farm tractors in Europe and North America.
The North America and Europe farm tractor market is expected to record sales volume of 582.2 thousand units by 2024.
By revenue, the market is projected to expand from US$13.6bn in 2015 to US$17.23bn by 2024.
While the North America farm tractors market will register a modest 3.0% CAGR by value during the forecast period, Europe is expected to exhibit a 5.4% CAGR from 2016 to 2024.
The North America farm tractor market was pegged at around 245 thousand units in 2015. Despite a declining sales volume across the higher horsepower segment, the market exhibited marginal volume growth from the previous year owing to the rise in demand for tractors below 40 HP.
While the sales of farm tractors will continue a positive trend in the US, the sales in Canada have been witnessing a downward trend owing to a weak dollar and higher prices of the tractors.
In 2015, the Europe farm tractor market volume was pegged at around 153 thousand units. The market has been recording a decline in year-on-year growth in terms of volume over the last two years owing to a low demand from several European countries, including Germany, France, Turkey, the UK, and Italy. However, the trend is likely to change in 2017.
“Tractor manufacturers are poised to lower the prices across different horsepower segments so as to attract more sales and recover from the sluggish demand,” the lead analyst for TMR said.
There has been a growing trend of farm mechanization across North America and Europe owing to the numerous benefits offered, including considerable savings in terms of time and resources, improved efficiency, and increased production.
In addition to this, precision farming has driven the need for mechanization among various farm practices, thereby fueling the demand for farm tractors.
The shortage of farm laborers in these regions has also propelled the use of mechanized farming techniques and equipment such as farm tractors.
Another significant factor that has boosted the adoption of farm tractors across Europe and North America is the growing demand for agricultural products, brought on by the rising population.
“In view of this, governments in these regions have focused their attention on encouraging the usage of mechanized farming techniques by offering subsidies and easy access to credit to farmers,” TMR said.
What poses a challenge to the North America and Europe farm tractors market is the implementation of strict emission norms in most developed countries.
Regulatory bodies such as the US Environment Protection Agency (EPA) and the Economic Commission for Europe (ECE) have imposed stringent regulations pertaining to the use of diesel engines, particularly in off-road vehicles.
Tractor manufacturers are, therefore, forced to incur additional costs to adhere to these norms, thereby restricting the uptake of farm tractors.
The top three players in theNorth America and Europe farm tractor market – Deere and Company, CNH (Case New Holland) Industrial, and AGCO Corporation – accounted for a share of just under 70.0% in 2015, hinting at the rather consolidated nature of the competitive landscape.
Among these, Deere and Company alone held a share of over 35% that year, emerging as the clear leader.
TMR finds that the degree of rivalry among players in the North America and Europe farm tractor market is quite high owing to the strong presence of large and established companies.
Enhancing product portfolio, investing in innovations, and forming strategic alliances are some of the key growth tactics employed by players in this market.
In September 2016, market leader John Deere launched a new 450 HP tractor that is specially designed to achieve reduction in fuel consumption. This has enabled the company to reinforce its strategic plan of focusing on innovation.
This review is based on the findings of a TMR report titled “Farm Tractor Market – North America and Europe Industry Analysis, Size, Share, Growth, Trends and Forecast2016 – 2024.” North America and Europe Farm Tractor Market, by Horsepower.”