Growing demand for heavy construction machinery is anticipated to boost the Aftermarket Parts in Construction Industry Market during the forecast period 2020-2025. The Global market for Aftermarket parts in construction industry is forecast to reach $1126.82 million by 2025, growing at a CAGR of 8.37% from 2020 to 2025.
Due to factors such as economic development in emerging countries, growing number of public construction projects, industrial and residential complexes, expansion of rail networks and others, the heavy construction machinery market is gaining momentum in the global construction industry. For business leaders, this offers significant growth opportunities. Consequently, with increase in demand for heavy construction machinery the market for aftermarket parts and equipment develops.
The growing spending in construction activities is also driving the heavy construction machinery industry ahead. The National Highways and Transport Growth Corporation received a proposal for the construction of five tunnels worth USD 3.42 billion in April 2017. These tunnels can help deter road accidents due to avalanches, namely the Zojila tunnel at Zojila Pass (14kms), the Vailoo tunnel at Sinthan Pass (8-10kms), the Z-Morah tunnel (6.5kms), the Pir-Ki-Gali tunnel at National Highway-244 (8.5kms) and the Daranga tunnel at Shudh Mahadev (4.5kms). Investment in such capital-intensive projects and development is estimated to continue to grow considerably, thus increasing the market growth for heavy construction machinery. The demand for road construction machinery has also seen significant growth due to the increased road development programmes undertaken by central and state governments, especially in Asia-Pacific countries.
In present scenario, the COVID-19 pandemic has impacted the market by directly impacting production and consumption, by disrupting supply chain & market, and by impacting its financial effects on construction industry markets. Owing to the increasing demand to implement social distancing due to the extremely infectious nature of Coronavirus (COVID-19), lockdowns have caused most firms and government organization to shut down their construction or related activities. Thus COVID-19 has impacted the market growth by declining its market demand owing to reduced construction developments. The opening up of the economy post pandemic has enhanced the construction industry. The recovery of construction industry has further fueled the demand for heavy equipment that serves function such as earthmoving, finishing and material handling, and material transport.
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Aftermarket parts in construction industry market growth drivers:
- Rapid investment in the development of Public Infrastructure
Increasing spending in public infrastructure expansion, such as the building of roads, highways, bridges, airports and others, is paving the way for market growth of aftermarket parts in the construction sector. Investment of $1.5 trillion in modern new federal infrastructure resources was introduced by the U.S. President's fiscal year 2019 infrastructure plan. The investments will also contribute to improving the US economic situation and will also satisfy the need for accelerated urbanization and modernization. In China, the Belt & Road initiative is predicted to grow by $117 billion in 2020. Such initiative would boost road and belt infrastructure development in countries such as South Korea, Vietnam, Malaysia and other developing countries. Therefore, with the rising implementation of airport building projects in Europe, Asia, Africa and the Middle East, the demand for construction equipment is rising thereby driving the market growth for the aftermarket parts in the construction industry.
- Growth of Rental Equipment
Purchasing construction equipment requires high down payments, high capital costs and other extra expenses. Owing to these significant reasons, most of the builders are moving to rental equipment providers which in turn fuel the demand for aftermarket parts in the construction industry. Emerging demand for heavy machinery has intensified the need for construction companies to focus on rental facilities. Rental providers often upgrade their inventories on a daily basis, making it simpler for companies using rental equipment to deal with the evolving EPA emissions regulations. Rental equipment also leads to provide startup construction companies with enhanced equipment in order to compete in the market. These key factors drives the market growth for aftermarket parts in the construction industry.
In 2019, Arihant Group had announced of investing about 250 crore towards development of an affordable residential housing project at Greater Noida. The company had also revealed that the first phase of the project is expected to be completed by April 2022 while the entire project will get completed by November 2024 under affordable housing scheme of the central government. Rising growth of residential housing projects act as one of the major driving factors booming the construction activities, thus causing a positive impact on the residential construction equipment market.
In 2020, KMG International had signed a EPC contract agreement with Calik Enerji by investing about 148 million USD towards construction of its new plant to be completed by 2023 across Romania. This expansion of its new plant is planned for stabilizing the production and distribution of electricity within the Dobrogea region, thus strengthening its industrial market position within the country. Such future expansion projects will create high needs towards various construction machinery including cranes and hoists, tractors, dump trucks, loaders, and many others in the near future.
The Major Players in this Market Include
The major companies in the Aftermarket parts in construction industry market include XCMG Group, John Deere, Caterpillar Inc, Komatsu, Volvo, Kubota, Hidromek, SANY Heavy Industry Co. Ltd., Takeuchi, Yanmar and others. In August 2020, Kubota expanded its construction machinery manufacturing business by establishing a new production plant in North America. It enabled the company to reduce the lead time and mitigate the foreign exchange risk. In June 2020, Sany Heavy Industry Co. Ltd partnered with Deutz. Through this partnership new truck engine D12 was jointly developed by SANY. Its engine power can reach upto 430HP and 460HP. The engine also ensures large torque at low speed.
Aftermarket products are replacement parts and are not manufactured by the manufacturer of the original equipment. The products used in the construction sector includes tyres, alternators, starting motors, engine parts, hydraulic pumps, among others. The demand growth for aftermarket components in the construction industry is driven by the significant growth of the construction industry, growing demand for heavy machinery, and others particularly in developing nations, due to the improving economy.
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