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

MARKET OVERVIEW

The Germany construction equipment market size by volume was valued at 118,611 in 2023 and is expected to reach 139,504 units by 2029, growing at a CAGR of 2.74% during the forecast period. The government of Germany is investing in the redevelopment of infrastructure projects, including the expansion of ports, railway lines, roadways, and highways across the country. For instance, the 2030 Transport Infrastructure Plan outlines the transport policy for the next decade and a half, encompassing upgrades and new projects for road, rail, and waterway systems. Continuous investment in renovating and repairing public infrastructure is expected to drive the Germany construction equipment market during the forecast period.

Increased Investment in Public Infrastructure Projects

1. The Federal Ministry for Digital and Transport (BMDV) has acknowledged a significant neglect of the rail sector in previous decades, resulting in a substantial investment backlog. To address this, they have anticipated a requirement for up to USD 48.8 billion in additional funding by 2027. Moreover, in the draft 2024 budget, the Ministry of Transport has allocated USD 1.6 billion for rail, sourced from the CO2 surcharge on heavy goods vehicles.
2. It prioritizes structural maintenance of current networks and alleviates bottlenecks on major transport routes. Out of the total funding of USD 302.2 billion until 2030, approximately USD 159.1 billion will be allocated to maintaining existing networks.
3. Moreover, as of Sept 2023, Germany’s Transport Ministry announced a USD 42.7 billion investment plan at the 2023 Rail Summit in Frankfurt. This funding, available until 2027, addresses the country’s neglected rail infrastructure.
4. Since 2021, the German government has been unable to achieve its yearly goal of constructing 400,000 apartments. According to the German Property Federation (ZIA), a deficit of 600,000 apartments in Europe's largest economy is projected to increase to 830,000 by 2027.
5. The country has planned to spend USD 220 billion by 2026 to assist in industrial transformation, including climate protection, hydrogen technology, and electric vehicle charging station expansion. These projects are projected to support the growth of the Germany construction equipment market. Also, construction equipment and buildings experienced a 22% growth in 2021 compared to the previous year due to the push of infrastructure with highways, dams, and green cities.
6. In 2023, the German government provided an extension of financial guarantees for Siemens Energy, a leading wind farm manufacturer headquartered in Munich. This decision is part of a USD 16.2 billion package designed to support the company amidst financial challenges and enable its continued involvement in significant renewable energy initiatives.

KEY HIGHLIGHTS

1. Earthmoving equipment accounted for the largest share of the Germany construction equipment market in 2023. Excavators in the earthmoving segment accounted for the largest share in 2023. Rising investment in housing, port expansion, and public infrastructure projects is expected to drive the demand for excavators in the Germany construction equipment market.
2. In 2023, the Germany construction equipment market experienced a transitional phase marked by a downturn in building construction and geopolitical tensions. New order intake decreased notably, yet sales remained relatively stable in the market. This stability was attributed to reducing the significant order backlog from 2021/2022.
3. In 2023, the construction sector in Germany faced difficulties due to an overall economic slowdown. Factors like increased product costs, labor shortages, and financing challenges affected the market, especially in housebuilding. The PMI index has continuously declined since April 2022, suggesting a prolonged downturn with no immediate resolution.
4. In early September 2023, Algeco GmbH ordered three Konecranes forklifts for their Kehl facility in Germany. The order includes one SMV 12-1200 C forklift truck with a special spreader, scheduled to arrive at the factory in December 2023, with the other two expected in the new year (2024).
5. As of Sept 2023, HD Hyundai Infracore Co. is establishing its directly managed European subsidiary in Germany to counterbalance sluggish demand from financially strained Chinese developers.
6. In 2023, Mateco, an equipment rental company, bolstered its footprint in the Germany construction equipment market by acquiring H&M Arbeitsbühnenvermietung, a specialist in aerial platforms.
7. In July 2023, German aerial lift rental company Gerken acquired 700 new scissor and mast lifts, comprising nine different models, including Rough Terrain and slab variants. All of the lifts are electric or manually powered.
8. In March 2024, the German government planned to invest approximately USD 108.2 million to support the USD 324.7 million expansion of the North Sea port of Cuxhaven. This investment will boost the sales of mobile cranes in the Germany construction equipment market.

MARKET TRENDS & DRIVERS

Adoption of Building Information Modeling (BIM) to Enhance Remote Monitoring & Digitization

1. In the German market, approximately 20% of companies have maturely applied the BIM strategy, and approximately 40% are still applying it. Projects exceeding USD 98.87 million are mandated to apply BIM.
2. The Federal Ministry of Transport and Digital Infrastructure (BMVI) is aiding medium—and small-sized companies in integrating BIM to increase the productivity of construction processes and improve the quality of buildings.

Investment in Green Infrastructure Strategy

1. Germany has targeted to invest USD 220 billion by 2026 to support the industrial transformation, including climate protection, hydrogen technology, and expansion of electric vehicle charging stations.
2. The Green Infrastructure Strategy was developed by the European Commission in 2020, which aimed to develop organic systems, both natural and engineered, that act as living infrastructure in rural and urban settings to promote social, economic, and ecological growth, focusing on sustainable growth.

Surge in Renovation & Repair Projects for Public Infrastructure Supports Demand for Construction Equipment

1. In Sept 2023, Germany's Federal Ministry for Transport announced a USD 43.3 billion investment plan until 2027 to improve Germany's railway infrastructure at the 2023 Rail Summit in Frankfurt.
2. The ministry stated that the majority of funds in 2024 will be directed toward Germany's construction industry, with approximately USD 20.4 billion designated for building renovations and new constructions. 

Response to Focus on Sustainability and Smart City Development to Propel the Demand for Compact Machines in the Germany Construction Equipment Market

1. “Green building” is one of the German government's key investment strategies and is expected to boost the demand for compact-powered construction equipment. Germany has invested approximately USD 12.5 billion in developing green buildings in compliance with ESG norms.
2. The growing demand for excavators in the Germany construction equipment market is attributable to improvements in the underground mining and construction sectors and a few government projects, such as the smart city project. Moreover, the market for compact excavators is evolving into a more innovative sector due to the intelligent systems driven by IoT and data analysis for service, networking, and sustainability.

Increased Investment in Green Fuel Solutions to Generate Demand for Related Infrastructures

In 2023, the German government unveiled its National Hydrogen Strategy update, aiming to accelerate establishing a hydrogen market to achieve climate neutrality by 2045. The update includes doubling the 2030 target for domestic electrolyzer capacity to produce green hydrogen from renewable sources to 10 gigawatts. Furthermore, since 2021, the German government has been unable to achieve its yearly goal of constructing 400,000 apartments. According to the German Property Federation (ZIA), a deficit of 600,000 apartments in Europe's largest economy is projected to increase to 830,000 by 2027.

INDUSTRY RESTRAINTS

Germany’s Residential Slump Expects to Impact the Germany Construction Equipment Market Negatively

According to calculations by the German Property Federation (ZIA), there is currently a shortage of 600,000 apartments in Europe's largest economy. This deficit is projected to increase to 830,000 by 2027. Also, Germany's housing crisis persists, as the Federal Statistical Office (Destatis) reported a 23.5% decrease in residential building permits issued in January 2024 compared to the same period in 2023. Only 16,800 apartments were granted permits in January, marking a decline from the previous year.

The Skilled Labor Shortage in the Country Hampers the Pace of Construction Projects

In Feb 2024, the German government highlighted the significant challenge facing Europe's largest economy, emphasizing growth constraints due to a workforce shortage. For 2024, the government anticipates a growth rate of 0.2%, down from the previous forecast of 1.3%. Further, with approximately 700,000 vacancies currently unfilled, Germany's economic growth potential has declined to 0.7% from around 2% in the 1980s and is projected to decrease further to 0.5% if the issue remains unresolved.

The Scarcity of Logistics Space and High Rents in the Country Negatively Impact the Demand for Construction Equipment

1. Germany is facing a shortage of logistics space. The Federal Association of Forwarding and Logistics expects around four million square meters of additional storage space to be needed by 2025.
2. In Berlin, the prime rent for storage space for approximately 5,000 m² or more rose due to the increasing shortage of space from $7.03/m²/month to $8.40/m²/month.

VENDOR LANDSCAPE

1. Caterpillar, Komatsu, Volvo CE, Liebherr, JCB, and Hitachi Construction Machinery are leaders in the Germany construction equipment market. These companies have a strong market share and offer diverse sets of equipment.
2. LiuGong, Terex, Bobcat, Yanmar, Manitowoc, Hydrema, John Deere, Manitou, Jungheinrich AG, Wacker Neuson, and Toyota Material Handling are niche players in the German construction equipment market. These companies offer limited product diversification and have a strong presence in the local German market.
3. XCMG, SANY, Kobelco, Kubota, Zoomlion, CNH Industrial, DEVELON, and HD Hyundai Construction Equipment are emerging in the German construction equipment market. These companies are introducing new technologically advanced products to challenge the market share of the country’s market leaders. 
4. AUSA, Merlo Spa, Hidromek, Kato Works, Bomag, Tadano, Takeuchi, Haulotte, JLG, Ammann, and Mecalac have low product diversification in the Germany construction equipment industry; these companies are lagging in adopting new technologies used in construction equipment.