Australia Compact Construction Equipment Market - Strategic Assessment & Forecast 2023-2029

MARKET OUTLOOK

The Australia compact construction equipment market is expected to reach USD 697.2 million by 2029. The country’s government planned to invest in various infrastructure projects nationwide. Several infrastructure projects, including railways, airport & roadways expansion, are under progress in 2023. These projects are expected to drive the Australia compact construction equipment market. A rise in government investment in public infrastructure and warehouse expansion projects across the country drives the market.

The Australian compact construction equipment market is expected to reach 20,646 units by 2029, growing at a CAGR of 5.09%. The government is committed to investing in transport infrastructure projects under the Infrastructure Investment Program. The investment is directed toward developing key freight routes in the regions, reducing city traffic congestion, developing high-speed railways, & improving road safety. Further, investment is also directed in the recycling sector. In 2022, the government invested USD 250 million into new and upgraded recycling infrastructure through the Recycling Modernization Fund.

The Australian government plans to spend over USD 6 billion yearly on water and wastewater treatment services in 2022. Also, a USD 16.7 billion fund is allocated to generate power through clean energy, backing the government's goal of achieving carbon neutrality by 2050. The rising investment in the public infrastructure and transport sector project will support the Australian compact construction equipment market.

KEY HIGHLIGHTS

• Compact excavators accounted for the largest market share of the Australia compact construction equipment market in 2022. Construction industry end-users accounted for Australia's largest share of compact construction equipment; compact equipment sales grew sharply in 2021 post-pandemic. The sales increased due to rising infrastructure investment & housing sector across the country.
• Compact excavators and forklifts have the strongest market share in Australia compact construction equipment market.
• Investment in infrastructure development projects, including investment in housing schemes & transport facilities, supports the growth of the construction industry. Some major challenges include the growing risk of economic recession, supply chain pressures, and over-dependency on foreign labor forces.
• Compact construction equipment has nearly 50% of overall construction equipment sales in the Australia compact construction equipment market.
• The most popular compact excavator is a 1.5-ton mini excavator. The highest-selling model is 18Z-1 (1.8 ton) in Australia.
• The demand for electric forklifts has increased in the Australia compact construction equipment market. Some local manufacturers, such as Clark Forklift & Task Forklift, provide electric forklifts in the market.
• The e-commerce industry in Australia witnessed growth in 2020. The industry continues to grow in 2023 due to the rising change in customer buying patterns post-pandemic. The good performance of the e-commerce industry supports the growth of the warehouse & logistics industry in Australia.
• Western Australia is an epicenter and an important player in the global mining industry. The region is a major iron ore supplier with several projects, for instance, in the Pilbara region.

MARKET TRENDS & DRIVERS

Government’s Infrastructure Investment Supports Compact Equipment Demand

• The government planned USD 120 billion for infrastructure projects in the pipeline over ten years. The investment focuses on projects that improve long-term productivity, supply chains, and economic growth in various cities and regions.
• Additionally, the government promised the investments to exceed USD 146 billion between 2021-2025. Private sector construction demand is projected to be between USD 8.0 and USD 9.5 billion 2023. The residential and commercial construction projects are expected to grow in 2023.
• In 2023–24, the government will provide funding of USD 15.5 billion to support state infrastructure projects. The government provides road and rail infrastructure funding through the Infrastructure Investment Program under the National Partnership Agreement on Land Transport Infrastructure Projects and supports the Australia compact construction equipment market growth.

Growth in the E-commerce Industry Prompts Investment in Warehouses Expansion Projects
Australia is one of the world's largest e-commerce markets; e-commerce spending reached USD 50.2 billion in 2022, a 13% increase compared to 2020. Further, NewCold logistics company, in Dec 2022, announced to invest USD 160.3 million to build its first warehouse in Sydney’s west. Construction is designed to take place in two phases; the 1st phase will include a frozen pallet warehouse with 80,000 pallets. The growing number of warehouse construction is projected to impact the Australia compact construction equipment market positively. Also, Woolworth (supermarket chain) announced its plans to construct two new automated warehouses at Moorebank Logistics Park in Western Sydney. The warehouses are anticipated to be operational by 2024.

Rise in Sales of Hybrid and Electric Compact Equipment in the Australia Compact Construction Equipment Market
Australia’s Long-Term Emissions Reduction Plan aims to achieve net zero emissions by 2050. Construction equipment manufacturers and companies increasingly know the government’s environmental regulations. Further, Volvo CE launched its new Volvo CE EC300E Hybrid Excavator in Feb 2023, an environmentally friendly option offering improved fuel efficiency. The machine consumes less than 15% fuel and generates 15% less carbon emissions. In March 2023, Hitachi Construction Machinery announced it would launch new wheel loaders and excavators from Australia's popular ZW-7 and ZX-7 series.

Incorporation of Telematics System in Compact Equipment for Optimum Performance

• Telematics is remote communications and informatics that are majorly used for fleet tracking or managing a group of vehicles and other assets. Off-road telematics can track the performance and location of both plant and equipment in real time.
• On-road telematics provides operators with reporting data updated with information related to human resources. Such benefits will lead to the adoption of telematics.
• In 2023, Volvo CE launched and integrated its new telematics system- CareTrack, in its articulated haulers (A25-A60), wheeled loaders (L60-L350), and excavators (EC140-EC950).

INDUSTRY RESTRAINTS

Shortage of Labor Force Hampering Construction Projects

• In 2023, Australia continues to see a shortage of skilled labor. Affecting all industries and depleting labor resources, it shows no signs of diminishing.
• National Skill Week’s chairman reported a critical skilled labor shortage in the construction sector hampering the project delivery timelines in 2022. It was predicted that the shortage would reach 100,000 vacancies by 2023.
• A labor shortage can lead to avoidable issues for the construction industry, such as increased workplace injury, extensive project delays, less quality control, and higher construction project costs.
• According to Arcadis Construction Costs Index Report 2023, there will be more than 100,000 unfilled roles in the Australian construction industry.

Surge in Housing Construction Cost Negatively Impacts Housing Projects

• Rising construction costs impact the Australian housing industry. The contractor is holding off building tens of thousands of homes across the region despite already gaining planning approval, largely because of surging construction costs, with apartments and townhouses the majority of those shelved in Victoria region.
• The Housing Association Industry mentioned the continuous rise of construction costs because of high energy prices and inflation. The cost of energy-intensive resources such as cement, glass & aluminum has increased tremendously.
• According to the Australian Bureau of Statistics, in 2022, prices of commodities such as steel products witnessed a 42.1% increase.

VENDOR LANDSCAPE

• Caterpillar, Komatsu, Kubota, Hitachi Construction Machinery, and Volvo Construction Equipment are leaders in the Australia compact construction equipment market. These companies have strong market share and offer diverse sets of equipment.
• Manitou, Maximal, Kanga Loaders, Toyota Material Handling, Bobcat, CNH Industrials, & Mecalac are niche players in the Australia compact construction equipment market. These companies offer low product diversification and have a strong presence in the Australian local market.
• XCMG, Hyundai Construction Equipment, Takeuchi, SANY, Yanmar, JCB, Kobelco, John Deere, & LiuGong are emerging in the Australia compact construction equipment market.
• The emerging players are introducing new technologically advanced products to challenge the market share of market leaders in the Australian market.
• Hangcha, Task Forklift, and Yuchai have low product diversification; these companies are lagging in adopting modern technologies used in compact construction equipment in the region.