Equipment sales hit record high

The latest report from off-highway research says construction equipment sales in Western Europe grew +8% during 2005 to reach a new record high. This increase, on top of +11% growth recorded in 2004, means that sales in 2005 reached 163791 units last year. This exceeds the previous record of 151460 machines sold in 2000 and defies the -4% decline predicted for 2005 by Off-Highway Research this time last year.

“Last year saw the highest number of machines ever retailed in Western Europe and is likely to represent the peak of demand for at least the next two or three years,” said Off- Highway Research managing director David Phillips. “Any decline is not likely to be serious, instead it is expected to represent a return to more normal levels.”

According to Mr Phillips, the stronger than expected demand in 2005 can be attributed to the combination of growth in rental, low inflation and interest rates and rising business confidence. Buoyant housing markets in Europe, particularly in France and Spain, also helped to boost the construction equipment sector during 2005.

However, the growth in sales last year could have been up to +10% higher if manufacturers had the capacity to match orders from their dealers. Off-Highway Research predicts the problem will become more serious in 2006 as order backlogs result in lengthening lead times. Mr Phillips said few manufacturers are significantly adding to their production capacities, although many are now running at 95%.

Top Performers

Strongest growth during 2005 was recorded in some of Europe's smaller markets. Sales in Denmark grew +32% to 4225 machines, while sales in Ireland and The Netherlands both grew +21% to 4142 and 4318, respectively.

The &Big 5' markets made up 80% of European equipment demand last year. Spain grew +13% to 16624 machines, France gained +11% to reach 30790 units, Germany was up +6% to 24517 machines, the UK rose +5% to a volume of 30271 and Italy was up +1% to 28896 pieces.

Austria was the only country to record a drop in sales last year with a -8% fall to 2255 machines.

Sales across Western Europe in 2006 are expected to decline by -5% to around 156000 machines, with the biggest losses expected in France (-17%) and Spain (-13%). Sales in Portugal are expected to outperform the rest of the market with gains of +12%, while single digit growth is predicted for Austria, Belgium, Germany, Ireland and The Netherlands. Small losses are expected in the other markets this year.

Global Perspective

Increases in construction equipment sales in Western Europe last year were matched by growth in North America, Japan and China.

North America's market outstripped predictions last year by growing +16% to 233469 machines. Growth is expected to continue during 2006 but at a slower rate of around +5%. Japan's return to form with +8% growth last year is not expected to be maintained and Off-Highway Research predicts that the market will slump by around -12% this year.

Financial controls imposed in China by the Government in April 2004 do appear to have steadied the market with gains of +1% in 2005. This is expected to be followed by an increase of +4% in 2006, taking sales to 156045 units.

Overall demand for construction equipment in the four major markets grew +8% last year to 611250 units. Off-Highway Research's prediction is for further growth of +1% this year to take the construction equipment market to a record 616300 machines.

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