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

MARKET INSIGHTS

The France compact construction equipment market is expected to reach 57,342 units by 2029, growing at a CAGR of 5.31%. Regions across France are heavily investing in infrastructure development projects, including the repair and renovation of airports, railway lines, roadways, and highways. A surge in infrastructure development under the 'France 2030' investment plan is expected to drive the demand for compact construction equipment during the forecast period. For instance, a five-year agreement between the French government and Action Logement group for a period of 2023-2027 will involve funding with a capital investment of USD 15.7 billion in various activities. A budget of USD 6 billion for financing landlords in housing renovation and construction, USD 4 billion for aiding employees, and USD 5.7 billion will be utilized for public housing policies like the Urban Renewal (NRNRU) and Action Coeur de Ville.

Increased Investment in Public Infrastructure Projects

• The French government has increased its focus on social housing projects and aims to build 120,000 housing units by 2024. Several housing repair and renovation projects are under progress in Paris, which are expected to have a positive impact on the France compact construction equipment market.
• The modernization project of the Ciments Calcia Chemical Plant at Aurvault, France, is underway. The project includes replacing two semi-dry kiln lines with a new 4,000 tpd dry-process line with pre-calciner and the modernization of the cement production workshop. The project will allow the plant to cut its carbon emissions by 27%. The investment in this project is estimated to be USD 305.6 million, which is expected to be completed by Q4 2025.
• In December 2022, Neoen (a French producer of renewable energy) was awarded 180 MW of solar and wind power projects in France. Construction on two solar plants is expected to begin in 2023, with a total of 42.1 MWp out of the 11 projects. The two solar projects, Isle-sur-Marne-19.3 MWp, Marne, and Morhange 2 22.8 MWp, Moselle, are located in the Grand Est region.
• The logistics industry surged due to the expansion of warehouse spaces across the country. For instance, Arcese (road and intermodal transport, international sea and air freight forwarding, and integrated logistics company) announced expansion of its logistics and warehousing activities in 2022. It also opened a new warehouse of 2,000 square meters with two buildings in the same year.
• In 2022, GLP (an investor and developer of logistics warehouses) acquired a 39,700-m2 warehouse in Loire Atlantique, France. The warehouse comprises six cells of 6,000 m2. In 2022, Dashser started the construction of a new warehouse in Pont d'Ain in the Auvergne-Rhône-Alpes region in France. The warehouse is designed to have an area of 18,000 m2 and 21,000 pallets. The company has solar panels.
• Under the 'France Relance' recovery plan, an investment of around USD 4.2 billion in upgrading housing stock is allocated. Growing residential projects such as the Quai 80 residential complex, the Chelles senior residences project, & the Lisiere-en Seine development project are expected to drive the sales of aerial platforms in the France compact construction equipment market during the forecast period.
• Develon launched the new DX62R-7 and DX63-7 6-tonne Stage V mini-excavators. The DX62R-7 and DX63-7 are ideal for work in confined spaces on projects in construction, landscaping, utilities, rental, agriculture, recycling, waste, and many other areas.  The machines are equipped with a new D24 Stage V-compliant diesel engine providing 44.3 kW (59.4 HP) of power. 

KEY HIGHLIGHTS

• Compact excavators accounted for the largest market share of the France compact construction equipment market in 2022. Application of compact construction equipment in the material handling segment accounted for the largest share in 2022. Rising investment in housing, warehouse expansion, and public infrastructure projects is expected to drive the demand for compact excavators in the France compact construction equipment market.
• In 2022, Rhenus (logistics company) leased two new warehouses, each of 18,000 m2, in Paris and Lyon. The warehouse in Paris consists of 6,000 m2 of cells, designed to increase the capacity of the warehouse in response to the rising number of new clients. In 2022, Akzo Nobel (a Dutch multinational company) announced an investment of USD 21.3 billion to expand its production and upgrade its two production sites in France.
• In 2021, the country received an investment of approximately USD 800 million to build 340,000 m2 of housing and more than 1,600,000 m² for business and industrial activities. The France Relance, in 2020, invested around USD 4.2 billion for the upgradation of the country's housing stock. Investments by the government in residential projects will increase the demand for compact aerial platforms in the France compact construction equipment market during the forecast period.
• In 2022, the French government approved a bypass project in Rouen. This bypass is designed to connect with the A28 and A13 Autoroutes on the city's eastern side. The construction is expected to commence in 2027 or 2028. The bypass length would be 25.786 miles, with an approximate investment of USD 950.1 million. The government will grant USD 262.7 million, while the region will invest USD 219.8 million in the project.
• In March 2023, Toyota Material Handling launched three new electric forklift models, expanding the company's portfolio of material handling products and solutions. The new electric product launch features a Side-Entry End Rider, a Center Rider Stacker, and an Industrial Tow Tractor, offering customers access to versatility and performance on the job site.
• HD Hyundai Construction Equipment Europe launched the HW65A wheeled excavator and the HX65A crawler model. Both the models are equipped with Stage V Hyundai engines and flaunt a spacious new cab, standard proportional joysticks, and improved serviceability. It has TPowerful 48.5kW with 248Nm of torque, Proportional joysticks with a ram-lock on the joystick, and increased swing speed and swing torque.
• In 2022, Doosan announced the launch of its new 8-tonne excavator with a Stage V diesel engine in Europe. The machine is designed to operate in confined spaces, with a reduced tail swing and an increased boom swing angle of 60 degrees. The machine also offers a digging force of 6.7 tonnes and a traction force of 6.6 tonnes.
• As part of the France 2030 investment plan, the French government will dedicate USD 541.6 million to encourage domestic industry resilience to metal supply chain disturbances through continuous investment.
• In 2022, the average cost of apartments in France increased by 4.5% from the previous year. Rennes (60%), Lyon and Bordeaux (58%), Nantes (53%), and Strasbourg (45%) were some cities where prices increased at the fastest rate. A continuous surge in housing prices in the region is expected to hamper construction activities and demand for residential units, thereby impacting the France compact construction equipment market.

MARKET TRENDS & DRIVERS

Government Investments in Renewable Energy Resources Will Encourage the Demand for Compact Construction Equipment

• Two new bottom-fixed offshore wind farms with a combined capacity of 2.5 GW are being constructed. The first wind farm, with a capacity of approximately 1 GW, will be located 35 km off Oléron island in the Atlantic. The second wind farm, with a capacity of about 1.5 GW, will be situated 38 km off the coast of Normandy. The projects are expected to be awarded by the end of 2023 or early 2024.
• In Q2 2022, the Community of Communes of Haute-Saintonge in Charente-Maritime, Southwest France, selected BayWa r.e. for an ambitious energy transformation project. BayWa r.e. will manage the development of a 40MWp PV park, generating 52 GWh annually, along with the installation of a battery storage facility. Additionally, Lhyfe will establish a green hydrogen production unit using the solar park. The renewable hydrogen produced can be supplied to local authorities, schools, and urban transport providers within a radius of 100 to 150 kilometers. Further details of the project have not been disclosed.

Increased Investments in Public Infrastructure Projects Across the Country to Propel the Sales of Compact Construction Equipment
In 2022, the French government increased investments to upgrade transit facilities across the country. The government planned to invest USD 7 billion for the next ten years to develop 5,592.3 miles of small railway lines. In addition, USD 4.8 billion was allocated to maintain and modernize public transportation, such as metros and trams. Also, France plans to invest USD 170 million annually till 2024 to double the transportation of goods by upgrading railways. An amount of USD 4.7 billion was laid out in 2021 to improve railway networks and redevelop railway tracks. Apart from this, the government also planned to invest USD 290 million to develop 80.7 miles of separate pathways for bicycles in Paris. Such infrastructure projects are projected to support the growth of the France compact construction equipment market.

Government Investments in Housing Renovation and Development Projects

• Housing renovation projects have surged across the country. According to France housing data, more than 750,000 housing units were renovated in 2021. Moreover, the government disbursed USD 3.1 billion for the renovation of 751,646 housing units in 2021.
• In 2021, the French housing industry witnessed a sharp growth of 14.6%. The industry is expected to grow rapidly due to a rise in government investments in repair and redevelopment projects across the country. In 2021, the non-residential sector also grew considerably due to the expansion of warehouses in the country in response to the growth of the e-commerce sector.
• In 2021, EIB granted a loan of USD 134.2 billion to BATIGERE Network to build 1,500 homes over five years for 3,500 residents. Moreover, in July 2023, the senate proposed to achieve 370,000 fully renovated homes per year by 2030 before doubling the pace to 700,000 per year.

Increased Investment in the Hydrogen Economy to Support the France Compact Construction Equipment Market
In May 2022, the European Union unveiled its "REPowerEU" plan, which aims to strengthen the green transition. EU planned for France to produce 10 million tonnes of green hydrogen nationally (14% of the EU's total electricity consumption) and to import 10 million tonnes. Recently, in August 2023, the French green energy specialists Lhyfe and TSE launched a joint-venture (JV) project to develop the site of a former Poitou foundry (Fonderies du Poitou) into an industrial park which will focus on green energy and the circular economy. The joint venture will develop a solar park and a green and renewable hydrogen production unit.

Increased Thermal Renovation of Residential Buildings Across the Country
In old residential buildings, oil-based heating & fossil fuels were used to maintain the temperature during winter. However, the government is promoting heat pumps and renewable energy resources for thermal insulation in buildings. Therefore, the government planned to invest USD 4.8 billion in renovating thermal insulation in residential and public sector buildings across the country in 2022. Further, in July 2023, the country's government announced an additional investment of USD 7.5 billion focused on energy renovations and energy transition from 2024.

Integration of AI & Robotics in the France Compact Construction Equipment Market
Caterpillar's new D series skid steer loaders are integrated with the Cat Intelligent Leveling™ (ILEV) system. which provides several industry-smart features, including dual self-leveling, electronic snubbing, return-to-dig, and work tool positioning. Moreover, this new series of models is equipped with the necessary emission control standards provided by the government. Further, the digitization of construction equipment through advanced sensors, communication technology, and data analytics has revolutionized construction equipment. Real-time data collection enables predictive maintenance, minimizing downtime and extending equipment lifespan.​ AI-integrated equipment improves efficiency, delivers quality, enhances supply chain management, and reduces risks.

INDUSTRY RESTRAINTS

Skilled Labor Shortage to Hamper Construction Activities in the Region
The French economy is less affected by a labor shortage than by recruitment difficulties, concentrated in five sectors: health (230,000 vacant jobs), tourism (140,000), industry (100,000), construction (100,000), and transport (80,000). Surprisingly, Ile-de-France, the most populated region, accounted for the most vacancies (160,000) as of 2021. In line, Auvergne Rhône-Alpes was the second-largest region with vacant jobs (145,000). In Q1 2023, the unemployment rate in Hauts-de-France was 8.7%, the highest in France.

Strict Environmental Regulations to Hamper the Construction Sector
The construction industry in France accounts for approximately 43% of yearly energy consumption and 23% of greenhouse gas emissions, per the Ministry of Ecological Transition. The Extended Producer Responsibility (EPR) policy mandates manufacturers, importers, and distributors to consider all costs of products that disrupt the environment. According to the French Building Federation (FFB), the RE2020 environmental regulation, which came into effect in Jan 2022, also led to an additional 5% increase in the construction cost of new apartments.

Surge in Mortgage Rates to Restrict Demand for Residential Units

• According to FIEC, for 2023, housing starts may drop by 8,6% due to a fall in permits. This decrease should result from the collapse of sales in 2022 because of a less favorable financial environment (higher interest rates and stricter banking regulations).
• In 2022, the French government introduced a new policy that restricted the new mortgage loan limit to a maximum of 25 years, less than in 2021. The total amount borrowed would be covered at 35% of the borrower's income.
• In Q3 2022, the housing prices increased by 6.4% over 12 months. Consequently, housing sales also witnessed a continuous decline.
• Prices of five-year-old houses rose by an average of 8.2% over 12 months until Q3 2022. The prices of houses in non-urban areas increased by 8.6% during the same period. The average housing price is above USD 428,728 in Nice, Paris, Toulon, Lyon, Montpellier, and Rennes.

VENDOR LANDSCAPE

• Caterpillar, Volvo CE, Komatsu, Kobelco, SANY, and Hitachi Construction Machinery are front runners in the France compact construction equipment market. These companies have strong market share and offer diverse sets of compact equipment. For instance, Caterpillar, Komatsu, and Volvo CE account for the highest revenue in the France compact construction equipment market.
• Manitou, Merlo Spa, Toyota Material Handling, Bobcat, Yanmar, and Mecalac are niche players in the France compact construction equipment market. These companies offer low product diversification and have a strong presence in the French market.
• XCMG, Liebherr and, JCB, Kubota are emerging in the France compact construction equipment market. These companies are introducing new technologically advanced products to challenge the share of the market leaders.
• HD Hyundai Construction Equipment, Wacker Neuson, Magni TH, DEVELON, Takeuchi, and SENNEBOGEN have low product diversification; these companies are lagging in adopting new technologies used in construction equipment.