LONDON--(BUSINESS WIRE)-- Technavio’s latest market research report on the global agricultural tractor market provides an analysis of the most important trends expected to impact the market outlook from 2017-2021. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.
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Technavio has published a new report on the global agricultural tractor market from 2017-2021. (Graphic: Business Wire)
The growth of the agricultural sector is an important factor, which is driving the demand for the agricultural tractors. The rise in the wages of agricultural laborers is leading the farmers to adopt modern methods of farming. Growth in the participation of the private players and various government initiatives to increase farm output have led to the significant development of the agricultural tractor market.
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The top three emerging market trends driving the global agricultural tractor market according to Technavio research analysts are:
- Increase in consolidation of fragmented land in Europe and Americas
- Rising focus on less than 20 hp tractors and 50 hp to 60 hp tractors in APAC
- Increase in demand for CVT agricultural tractors
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Increase in consolidation of fragmented land in Europe and Americas
The trend of consolidating lands, depending on their size, in the Americas and Europe is increasing, as the profitability of larger farms is much greater than smaller farms. Bigger firms, such as Farm and Ranch Supplies, Archer-Daniels Midland, and Monsanto have started dominating the agricultural market.
“The consolidation of smaller farms is attributed to the fact that large farm size rationalizes better financial returns than small or mid-sized farms. Larger farms help farmers to decrease the cost of growing crops as economies of scale can be attained easily in a larger farm. This will encourage farmers to purchase all-wheel drive agricultural tractors which are more viable on the larger farms,” says Amey Vikram, a lead analyst at Technavio for automotive manufacturing research.
Rising focus on less than 20 hp tractors and 50 hp to 60 hp tractors in APAC
OEMs are focusing on grabbing more market share as the sales of agricultural tractors have increased in 2016 after sluggish sales due to the slowdown in the global economy. In India, OEMs are planning a strategy to develop robust sales network in agriculture-intensive states, like Bihar, Rajasthan, Jharkhand, Uttar Pradesh, Punjab, Haryana, and, where low-powered agricultural tractor engines are more popular and in demand.
In APAC, tractor manufacturers are increasingly focusing on tractors with engine power less than 20 hp or tractors with engine power 50 hp-60 hp. Approximately 86% of the farmers in India have fragmented land holdings that are less than 5 acres of land. As a result, it is not viable for farmers to buy costly and high-powered engine tractors as smaller lands will not be able to meet the minimum operational cost of tractors. Similarly, most of the Chinese farmers have small and fragmented lands. As a result, OEMs are launching all-wheel drive technology even in low-powered engine tractors to make them viable on smaller farms. All these factors are leading farmers to focus more on low-powered tractors in APAC.
Increase in demand for CVT agricultural tractors
There has been an increase in the demand for continuous variable transmission (CVT) agricultural tractors across all the regions. Unlike manual transmission, CVT does not have gear shift. CVT technology uses pulleys that are connected through a belt. These pulleys can change their sizes and thus, provide a change in the gearing. The CVT technology chooses the optimal gear ratio along its variable range, unlike the manual transmission tractors that provide transmission through the manual shifting of the gears.
“The transmission system has become complex in the larger engine size tractors. Some larger engine size tractors have a 24-speed gearbox, which makes the transmission system complex as well as expensive. CVT technology is less complex, especially for larger engines, as it allows the transmission system to match with the required engine power easily. Thus, it has led to the growing popularity of the CVT agricultural tractors,” says Amey.
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Source: Technavio Research