01 May 2008
Looking back on 2004, the european market for construction equipment performed much better than anyone expected.
One of the key factors behind this outlook was the general picture for construction activity in Europe. Euroconstruct, the network of specialised European research institutes, had forecast growth of just +0,8% in Western European construction output in 2004. Consequently, the construction equipment industry was expecting a year of weak demand – the boom years were over, and the region's biggest market, Germany, remained in recession.
However, Euroconstruct's most recent estimate, made in November last year, was that activity grew +1,9% in 2004 – twice the rate it had forecast a year earlier. This had a knock-on effect on the equipment market. There was also unexpected demand for machines from rental houses, which became more aggressive in their fleet renewal programmes last year.
Exact figures for 2004 are not yet available, but the increase in equipment sales in Western and Eastern Europe last year looks to be about +8%. The improvements were unevenly spread, with the demands of Europe's large civil engineering projects stimulating a strong increase in earthmoving equipment sales. The tower crane and concrete equipment markets also developed well. In contrast, the road building and crushing & screening equipment sectors did not enjoy such robust growth.
Unit sales of earthmoving equipment grew +16% last year in Western Europe, while the Eastern European market was up +29%. However, this impressive regional improvement had a diluted effect on the overall picture, as Eastern Europe accounts for just 7% of European demand.
In value terms, the UK is now Europe's biggest market, accounting for around 20% of the region's equipment sales. This figure grew some +11% last year to around US$ 3 billion (€ 2,34 billion). This year CECE expects a further +4% growth in the UK, signalling the end of the five boom years for this particular country.
Italy is Europe's largest market in terms of the number of unit sales, thanks to the popularity of mini excavators. Half the machines sold in Italy are compact excavators, and the value of the country's market is about US$ 2,8 billion (€ 2,19 billion). Demand is expected to grow +3% this year.
Europe's third largest market, Germany, remains weak, with demand lower than it was in 2000. There was growth of +3% last year, despite the continued construction recession. However, this improvement in sales of new machines seems to be due to the migration of used equipment to Eastern Europe, rather than any strong domestic demand. CECE expects equipment sales growth this year to be around the same level, +3% at the most.
The big surprise in 2004 was France, where high demand from equipment rental companies and improvements in the residential construction sector boosted the market some +14%. This boom is unlikely to continue this year, but growth of +4% seems achievable.
The last of the ‘Big 5’ markets, Spain, had another good year last year, with the Government's ongoing programme of infrastructure investment stimulating another year of growth in construction equipment sales.
CECE believes 2005 will be a positive year for the European construction equipment market. Euroconstruct forecasts +1,7% growth in Western European construction this year, while the prediction for the new member states is +8,1% growth. CECE expects the European equipment market to grow between +5% to +8% this year as a result.