News


Studies Predict Growing Global Demand for Diesel Engines and Agricultural Equipment


Two studies recently released from the Freedonia Group Inc., a Cleveland-based industry market research firm, predict growing global demand for diesel en- gines and agricultural equipment.


Diesel Engines World demand for diesel engines is


projected to grow 6.7% per year through 2015 to $197.5 billion. Product sales will be driven by an increase in the production of motor vehicles, particularly medium and heavy trucks and buses. Value gains will also be fueled by the growing use of more technologically advanced, higher value products because of increasingly restrictive emission regulations in a num- ber of regions. These and other trends are presented in World Diesel Engines, a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm. The Asia/Pacific region was the


world’s largest market for diesel engines in 2010 by a wide margin. China and In- dia will be the primary drivers for growth in the region, as expanding output of mo- tor vehicles and off-highway equipment combine with higher levels of fixed in- vestment to stimulate significant increas- es in diesel engine demand. The medium and heavy vehicle die-


sel engine segment will experience the greatest gains in this regional market in dollar terms, accounting for 53 % of total sales for the Asia/Pacific region in 2015. Demand for diesel engines in the Af-


rica/Mideast region is expected to expand 7.7 % per year through 2015, spurred by rising output of medium and heavy ve- hicles and off-highway equipment, in addition to rising fixed investment. Sta- tionary diesel engines will continue to ac- count for a relatively high proportion of the overall market due to the unreliability of electricity in the region, prompting the use of these products as backup genera- tors. The diesel engine markets in Eastern


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Europe and in Central and South America will also grow at healthy rates from 2010 to 2015. However, each of these regions will still account for less than ten percent of global sales in 2015. Demand for diesel engines in North


America and Western Europe will grow with renewed strength following a period of weakness. Continued high levels of off-highway equipment production will maintain


proportionally large demand


for off-highway diesel engines in North America. In Western Europe, lower diesel fuel prices and differing cultural factors will maintain the popularity of diesel en- gines used in light vehicles. Market gains in Japan will advance only 2.3% per an- num through 2015, dampened by slow growth in motor vehicle output, although this will represent an improvement over sales declines recorded between 2005 and 2010.


Agricultural Equipment World demand for agricultural


equipment is expected to increase 6.8% per year through 2016 to $175 billion. Growth will be driven primarily by sales gains in rapidly developing nations -- particularly China, Brazil, and India -- as these countries continue to mechanize their agricultural sectors. Population ex- pansion and strong economic growth in these nations -- and in other developing nations -- will put increasing pressure on their farm sectors to become more effi- cient and productive, resulting in growth in machinery sales. Farm tractors ac- counted for the largest share of product sales in 2011, representing 30 percent of all agricultural machinery sales. Plowing and cultivating machinery is expected to be the fastest growing product type through 2016. These and other trends are presented in World Agricultural Equip- ment, a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.


Agricultural machinery demand in


the Asia/Pacific region was more than twice that of any other region in 2011. China and India will be the primary na- tions fueling future market advances in the region, although other smaller mar- kets, including Thailand and Indonesia, will also expand rapidly.


Central and


South America will post strong sales gains as well, powered by growth in Brazil and other countries with large, in- creasingly mechanized agricultural sec- tors, such as Argentina.


Throughout the industrialized world, sales of farm equipment will be deter- mined largely by demand for replacement machinery. North America and Western Europe will both record below-average growth through 2016. Demand in these regions will be driven by technological advances, as the efficiency gains afforded by new, technologically


sophisticated


equipment will make it economically feasible for farmers to replace their ma- chinery more frequently. However, many farmers in developed regions delayed re- placing their older machinery during the 2008-2010 economic crisis, avoiding ma- jor purchases of new machinery because of an uncertain economic environment. As a result, 2011 saw the beginning of a spike in demand for agricultural ma- chinery, as better economic conditions prompted farmers to finally replace older machines. Since an average replacement cycle is generally eight to nine years, high demand in 2011 will mean many farmers will not be looking to replace machinery in 2016, constraining agricultural equip- ment demand. World Diesel Engines and World Ag-


ricultural Equipment are available from (The Freedonia Group, Inc., For further details,


contact Corinne Gangloff by


phone 440.684.9600, fax 440.646.0484 or e-mail pr@freedoniagroup.com. Also visit www.freedoniagroup.com.


August 2012


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