The global compact tractors market is anticipated to grow at a sluggish CAGR of 3.3%, with an absolute $ opportunity of more than US$ 4.2 billion during the forecast period (2020 – 2030). Mechanization of the global agricultural sector is projected to burgeon the high uptake of compact tractors.
However, the market is unravelling with the pandemic hampering supply chains, compelling tractors’ manufacturing companies to either halt production or operate in reduced capacity. For instance, In April 2020, one of the leading compact tractors manufacturing company Kubota Corporation suspended all operations at its Georgia, US plant. This has annihilated demand for compact tractors in the first two quarters of 2020.
Disruptions in international supply chains and drop in dealership sales are likely to hurt market players. In addition, applications in construction sectors have also gone down. However, leasing businesses are likely to pick up pace, influencing market developments.
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Compact tractors are relatively affordable to conventional tractor models. Such farming equipment has achieved popularity due to low-weight, reduced fuel costs, and minimal damage to crops during operations, all of which will sustain sales through the assessment period,” says the Fact.MR report.
Effect of COVID-19 on the Market for Compact Tractors Worldwide
With the spread of lockdowns in the majority of countries, the new coronavirus’s unparalleled consequences on trade and business are becoming more pronounced. Players in the compact tractor business have faced significant obstacles as a result of the pandemic, including a lack of raw materials, a labour shortage, broken supply chains, etc.
Due to the need to halt production, businesses have suffered severe financial shortages. For instance, CNH Industrial N.V. shut down all of its Grand Island, US, plant’s activities in April 2020. Deere & Company revealed in February 2020 that it will invest about US$40 million to support its troubled supply chain in China at the same time.
Anticipated Market Impact by Coronavirus Outbreak
The coronavirus pandemic has severely impacted international supply chains in the compact tractors sector. Also, the outbreak has reduced sales in dealerships, owing to lower disposable incomes among rural communities. Further, health concerns for factory workers has restricted operations in the manufacturing sector. On the other hand, market players are finding potential growth opportunities through virtual marketing and customer service resources, investments into precision agriculture, factory automation, and localization of supply and distribution networks.
Compact Tractors Market – Key Takeaways
- 20 to 40 hp tractors are witnessing increased sales, driven by interest for affordable mechanization from small and medium size farming businesses.
- Diesel powered compact tractors remain dominant, owing to lack of adequate electricity infrastructure in rural areas in developing economies.
- Asia Pacific remains a major market for compact tractors owing to growing labor costs and major importance of agrarian markets in national economies of the region, such as Australia, India, and China.
Compact Tractors Market – Driving Factors
- Investments into product development for multi-functional compact tractors, with harvesting, puddling, reaping, and hauling capabilities is boosting sales prospects.
- Rising migration of farm workers to urban areas, and the resultant shortage of labor resources contribute to sales.
Compact Tractors Market – Constraints
- Despite relative affordability of compact tractors, cost remains a major obstacle to sales, particularly in low-income farming communities in developing economies.
- Tariffs imposed by governments on international trade of compact tractors and components is holding back market growth.