Brazil Construction Equipment Market - Strategic Assessment & Forecast 2024-2029

INDUSTRY INSIGHTS

The Brazil construction equipment market size by volume was valued at 45,042 units in 2023 and is expected to reach 55,821 units by 2029, growing at a CAGR of 3.64% during the forecast period. The Brazilian government has increased the infrastructure investment and is directed at various public infrastructure projects such as railways, airports, roads & highways development. There was an 11% surge in government investment in the infrastructure sector in 2023. Growth in government investment in public infrastructure is expected to drive the demand for construction equipment in the market. Also, the government's investment in infrastructure development projects, including investments in residential units and transit facilities, drives the Brazil construction equipment market during the forecast period.

Rising Government Investment in Public Infrastructure, Mining & Renewable energy sectors

Brazil is one of the leading producers of precious metals such as iron ore, gold, aluminum, & nickel. The demand for these metals is growing globally, supporting investment in mining projects nationwide. There is a rise in nickel & copper extraction projects in the region due to its extensive uses in battery manufacturing of electric vehicles. A surge in mining activities nationwide drives the Brazil construction equipment market.

In 2023, the Brazilian renewable industry witnessed growth due to increased government investment in renewable energy sources such as solar, wind, and hydroelectric. The government focuses on improving the use of renewable energy resources to meet the country's power requirements. An investment of USD 9.1 billion is expected to be made to develop solar energy projects across the country in 2023.

KEY HIGHLIGHTS

• Earthmoving equipment accounted for the largest market share of the Brazil construction equipment market in 2023. Backhoe Loaders in the earthmoving segment accounted for the largest share in 2023. The rise in public infrastructure, mining, and renewable energy projects drives the Brazil construction equipment market.
• In the construction industry, end-user equipment utilization has the largest market share in 2023.
• Brazil is the largest market in Latin America. The country accounts for 40% of overall construction equipment sales in the region in 2023. Brazil is the center of construction equipment manufacturing in the Continent. All the major construction equipment OEMs have a manufacturing center in the Sao Paulo region of the country.
• Vendors in the Brazil construction equipment market are signing exclusive partnerships with end-users to gain market share and maintain their leading position.
• Hydraulic excavators & backhoe loaders are the region's two most sold construction equipment. The demand for this equipment is expected to grow sharply in 2024.
• Around 50% of demand in the Excavators segment is concentrated in the 20-to-25-ton segment.
• In backhoe loaders, the 80 to 99 horsepower range is the most popular class, which covers more than 65% of the Brazilian market.
• Since 2021, SANY Brazil has invested in the mining market for 60-ton SKT90S off-road and SK90E electric off-road trucks. In Q1 2022, CSN Mineracao signed an agreement with SANY in the Brazilian market.
• SANY has created a new energy technologies division for strategic planning, research, and development. In 2021, SANY developed 34 electric products, of which 20 have been launched with hybrid and electric equipment.
• SANY is focusing on the mining and crane sectors. The company serves mining, civil construction, cargo lifting, roadworks, and other construction.
• XCMG Brazil signed a contract to supply its mining machinery to iron ore, nickel, and copper mining major Vale in 2022. The company introduced two electric battery-powered mining haul trucks, XDR80TE of 72-ton, that operated in Vale’s Minas Gerais state iron ore in 2022.

MARKET TRENDS & DRIVERS

Spike in Demand for Mini Excavators Due to Rise in Civil Engineering & Redevelopment Projects in Brazilian Cities
With the rise in civil engineering & redevelopment projects in Brazilian cities in 2023, the demand for mini excavators witnessed sharp growth in the local Brazilian construction equipment market. Mini excavators are agile and sturdy. They can work in congested areas such as minor buildings, wall excavations, and renovations in compact streets and roads, among other operations. This equipment also stands out for application in small civil works such as renovations. For example, where they are present in several stages: in gardening, in the opening of swimming pools, in the removal of debris, parking lots, or underground garages. In addition, they are easy to transport machines.

Rising Demand for Electric Forklifts in the Brazil Construction Equipment Market

• The demand for electric equipment is rising in the region. The government invested in various port expansion projects in 2023.
• BYD has been operating in South American markets such as Brazil, Mexico, and Chile, offering green transportation solutions to support the region's transition to a low-carbon transportation sector.
• In 2023, Brazil implemented policies to promote the development of new energy vehicles.
• With the rise in demand for electric forklifts in the region, other OEMs are expected to follow similar trends in manufacturing electric forklifts that can be used for cargo handling purposes. The redevelopment projects on ports in the region will positively impact the demand.

Surge in Infrastructure Investment Drives the Demand for Construction Equipment

• Brazil's governments announced various infrastructure development projects in 2023. There is a diverse range of infrastructure investments and opportunities across the region. In 2023, there will be an 11% surge in investment in infrastructure projects in Brazil. 
• According to the National Transport and Logistics Observatory of Infra South America, Brazil invested USD 1.4 billion in transport infrastructure projects in the first seven months of 2023. According to Brazil's government, 172 infrastructure investment projects, ranging from airports to power distribution, mining, and urban mobility, are in progress in 2024.
• In 2023, the region’s government planned to invest USD 343.6 billion across the states under the Growth Acceleration Program. The investment will be directed to developing nationwide roadways, railways, and airports and propelling Brazil construction equipment industry growth.

Rise in Mining Activities Drive the Brazil Construction Equipment Market

• There is a surge in demand for commodities such as gold, copper, iron ore, and silver worldwide. Brazil's mining sector has ample opportunity to grow recently. The region is one of the leading producers of iron ore, copper, and gold.
• Brazil is one of the world's largest sources of reserves and metal, including aluminum, iron ore, and nickel, and the world's largest producer of gold. The demand for these metals is expected to rise due to their use in industry and construction activities.
• Nickel is used to manufacture batteries for electric vehicles. Thus, the domestic and internal demand for electric cars will drive the demand for nickels in the market.
• Iron ore, copper, and aluminum are used in construction projects across the globe. The mining companies also are investing in extraction projects.

INDUSTRY RESTRAINTS

High Inflation Rates Adversely Impact Corporate Investments
Brazil is facing the challenge of rising inflation rates. The Russian invasion of Ukraine pushed up energy prices across the globe. The disruption in the supply of raw materials such as steel, iron, and rubber further worsened the condition. Brazil’s annual inflation was 4.6% in 2023. The inflation rate was slightly higher than the central bank estimate, but it was in the target range set by the bank in 2020. Prices of services and goods witnessed growth in December 2023, drinks, foods & transportation sector saw a high price jump in 2023. Also, rising prices of imports, especially fuels and other commodities, were some significant factors pushing up inflation rates. A weak currency also contributed to the high inflation challenge.

Redtapism and High Building Material Costs Hampering Mining & Construction Industry Growth

• Brazil's construction and mining industries face the challenge of Retapes. Bureaucracy is hampering the growth of industries. For instance, the Environmental licensing in Brazil is very strict, and the federal government has been even more stringent about this.
• Vale, a significant iron ore producer in Brazil, was forced to reduce production in 2022 due to delays in securing permits for a project at Serra Norte Complex. Similar obstacles in permits and a complicated tax system hamper the growth of mining and construction industries.
• Brazil's government applies federal and state tax charges to imports that double import products' costs. The rise in building material costs is another major obstacle to upliftment in the country's construction industry and hampers Brazil construction equipment market growth.

VENDOR LANDSCAPE

• Caterpillar, Komatsu, Liebherr, XCMG, Volvo Construction Equipment, and Hitachi Construction Machinery are leaders in the Brazilian construction equipment market. These companies have strong market share and offer diverse equipment. 
• Manitou Group, Merlo, Liu Gong, Yanmar, and CNH Industrials are niche players in the Brazil construction equipment market. These companies offer limited product diversification and have a strong presence in the region's local market.
• Zoomlion, SANY, JCB, Kobelco, and HD Hyundai Construction Equipment are emerging in the Brazil construction equipment market. These companies are introducing new technologically advanced products to challenge the industry share of market leaders in the country’s market.
• Tadano, ElectroMech, Yongmao, SDLG, and Terex have established a significant presence in the Brazil construction equipment market and offer diverse product offerings. However, these companies generally fall short of their rivals in providing innovative and advanced products.