Construction equipment sales will cross 2018 peak next year

Sales of construction equipment, a barometer of economic activity, are expected to cross the 2018 peak of around 100,000 units next year, paced by increased government spending on infrastructure projects.

“Next year (2023) will be an important year. The execution of projects will be very high, starting from the end of the year until next year,” Volvo chief Dimitrov Krishnan told ET. Construction Equipment.”There could be a bit of disruption in the macro environment, which to a large extent is not just in the hands of government. It is also driven by global economic factors. But I believe 2023 should be the next peak.”

Krishnan said growing demand for electricity, coupled with the government’s focus on infrastructure investment to increase economic activity, would help boost demand for construction equipment.

“We expect growth of around 10% this year, on the total market side. The growth is largely driven by segments such as coal mining and handling,” Krishnan said.

“The need for electricity is driving the demand for coal production as well as the import of coal. At the same time, we have put a lot of emphasis on infrastructure,” Krishnan said on the sidelines of the launch of the EC 550 excavator last week.

The Center has planned a 36% increase in capital expenditure to a record 7.5 million rupees this financial year, with a focus on infrastructure development to spur growth.

Despite the pandemic, road construction activity has also been strong – in both FY21 and FY22. Last year, construction activity reached nearly 29 kilometers per day. With an increase in tenders, Krishnan expects road construction to continue growing this year.

Overall, the market is set to grow over the next few years and is expected to become the second largest in the world for construction equipment by the end of the decade.

“It’s a market with enormous potential. Our estimate is that the Indian market will grow 2 to 3 times by 2030. Not only that, with the direction that the government has set regarding sustainable energy solutions regarding electrification or the use of alternative fuels, India will be leading the way,” Krishnan said.

India is currently the third largest for the industry, after the United States and China.

To take advantage of this potential, Volvo CE is investing heavily in developing products suitable for the local market and aims to triple sales to around 6,000 units over the next five years.

“So our aim to serve the Indian customer is both through localizing the product and also doing a lot of engineering work out of India. We have so far developed road rollers and pavers with local R&D teams. Going forward, we will invest in R&D work for excavators, which are the most important markets,” Krishnan said.

Volvo will invest in R&D for diesel engine products, and also in future for options focused on sustainable power solutions.

Besides local sales, Volvo CE is also working on growing exports outside India. The company currently exports around 15-20% of its production out of India to markets in Southeast Asia, Africa, Latin America and neighboring countries like Nepal, Bhutan, Bangladesh and Sri Lanka. It has the capacity to produce 3,500 units per year in its manufacturing plant, with utilization levels in the range of 60-70%.

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