The tractors market was valued at USD 70.55 billion in 2021, and it is expected to reach USD 98.95 billion by 2027, registering a CAGR of 5.8% during the forecast period (2022 - 2027).
The tractor market has been impacted negatively by the outbreak of COVID-19, as the lockdowns in various parts of the world disrupted the supply chain during the second quarter of 2020, which impacted the production and sales of tractors globally. For instance, Mahindra and Mahindra, one of the leading tractor manufacturing companies, announced an estimated loss of 30,000 tractor sales from April to June 2020 as a result of the lockdown and other restrictions. However, with the gradual opening of the economies, the market studied is recovering at a high rate.
The key factors contributing to the increase in worldwide tractors sales are increasing farm mechanization rates, especially in developing nations, rising farm labor costs, seasonal labor shortages, and shorter tractor replacement cycles. However, the market is projected to be restrained due to fragmentation of land ownership and a high reliance on commodities prices.
The Asia-Pacific region is expected to witness significant growth during the forecast period as emerging key economies like India, China, and Japan are encouraging farmers in their countries by offering subsidized farm equipment and low credit rates to encourage tractor adoption. Such developments are likely to drive the demand in the region over the forecast period.
Key Market Trends
Below 40 HP Tractors Segment Expected to Gain Prominence Over the Forecast Period
The industry trend toward bigger horsepower tractors continues to grow worldwide, owing to greater performance in difficult terrain and versatility in farm and non-farm applications. The major tractor markets like India and China are recording positive growth across less than 40 HP segments in recent years.
Less than 40 HP tractors are often synonymous with the term compact tractors. With an engine displacement of not more than 1,500 cc, these tractors occupy less space and can be aligned with great flexibility. They are primarily used for mowing but can handle other basic farming tasks, like manure handling.
However, due to significant volatility in the worldwide market during the COVID-19 outbreak, demand for compact tractors fell dramatically in the first quarter of 2020. The imposition of lockdowns in numerous places has limited mobility and resulted in the closure of retail outlets. This has resulted in a market delay, which has significantly reduced sales.
With the majority of countries with huge agricultural activity, Asia-Pacific and African regions are witnessing high demand for less than 40 HP tractors, primarily for agricultural activities, as the low cost of these tractors increased the affordability rate among the highly populated small-scale farmers.
Several players in the market studied are launching the latest products to gain market share. For instance, in August 2021, Kubota introduced its new LX Series, a range of multi-purpose compact tractors under 40 HP with two different models: the 35HP LX-351 Rear ROPS and LX-351 Cab.
Factors such as compact size, ease of customization, and nearly 50% more price for the next power range of tractors, are expected to enhance the demand for these tractors. In this power band, the consumer bargaining power of consumers is high, as compared to high-powered tractors, given the wide range of options and substitutes from different manufacturers. With the aforementioned trends and developments, it is expected that the segment will experience a healthy growth rate during the forecast period.
Asia-Pacific Region Anticipated to Lead the Market During the Forecast Period
The tractors market is expected to be dominated by Asia-Pacific, and the region is predicted to develop at the highest rate over the forecast period. The growing preference for farm mechanization and an increase in the number of government-funded policies are anticipated to promote the growth of the market during the forecast period. For instance,
- In October 2021, the Indian government announced up to 50% subsidy on buying tractors under the PM Kisan Tractor Scheme. Farmers buying a tractor under the scheme can avail the benefits and pay half the amount.
Several regional regulatory bodies, such as China Agricultural Industry Mechanization Association, promote farm mechanization by educating co-operatives and individual farmers about the benefits of using high-horsepower tractors in larger farm areas. Some of the major players in the market are focusing on adopting various growth strategies such as product launches, acquisitions, mergers, etc., on strengthening their market position. For instance,
- In January 2021, John Deere made an announcement for an investment of USD 100 million for setting up a new tractor factory and expanding its existing unit in Pune, India. The new factory will be set up to fulfill the local demand as well as for exports to other countries of small agricultural tractors.
- In January 2020, Kubota Corporation demonstrated a concept tractor at a new product exhibition held in Kyoto City. The concept tractor is equipped with AI and electrification technology and is fully autonomous.
The expansion in the number of large agricultural producers and new rural groups engaged in farming contributed to this tendency to stabilize demand in the market. The introduction of large-scale bespoke hiring service enterprises in agricultural machinery in India has fueled the rise in farm mechanization. The subsequent move to automated technologies is envisioned to drive demand across the Asia-pacific tractors market during the forecast period. All these aforementioned factors are expected to drive the demand.
The tractors market is moderately consolidated as it witnesses active engagement from several global and regional players. Major players such as Mahindra & Mahindra, Tractor, Kubota Corporation, Farm Equipment Limited, and HMT Limited are adopting agreements and product launches as key developmental strategies to improve the product portfolio of tractor products. For instance,
- In October 2021, Mahindra launched three new YuvoTech+ tractors that come equipped with the new-age advanced technology with the highest torque and fuel efficiency.
- In March 2021, CNH Industrial made a minority investment in Monarch Tractor, a US-based agricultural technology company. This company is expected to assist CNH in accelerating agricultural tractors’ transformation towards autonomy and electrification.
- In February 2021, SAME introduced the new Delfino and equipped it with the new Stage V emission compliant engines, along with the ActiveDrive Front suspension system that helps in easy operation for the tractor.
- In January 2020, Kubota unveiled the new Prototype Electric Tractor and Compact construction machinery, to be launched first in the European market.
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support
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1.2 Scope of the Study
4.2 Market Challenges
4.3 Industry Attractiveness - Porter's Five Forces Analysis
4.3.1 Threat of New Entrants
4.3.2 Bargaining Power of Buyers/Consumers
4.3.3 Bargaining Power of Suppliers
4.3.4 Threat of Substitute Products
4.3.5 Intensity of Competitive Rivalry
5.1.1 Below 40 HP
5.1.2 40 HP - 100 HP
5.1.3 Above 100 HP
5.2 By Drive Type
5.2.1 Two-wheel Drive
5.2.2 Four-wheel Drive/All-wheel Drive
5.3.1 North America
22.214.171.124 United States
126.96.36.199 Rest of North America
188.8.131.52 United Kingdom
184.108.40.206 Rest of Europe
220.127.116.11 South Korea
18.104.22.168 Rest of Asia-Pacific
5.3.4 Rest of the World
22.214.171.124 South America
126.96.36.199 Middle-East and Africa
6.2 Company Profiles*
6.2.1 Deere and Company
6.2.2 CNH Global NV (includes New Holland and Case IH)
6.2.3 AGCO Corporation (includes Massey Ferguson, Valtra, Fendt, and Challenger)
6.2.4 CLAAS KGaA mbH
6.2.5 Mahindra and Mahindra Corporation
6.2.6 Kubota Corporation
6.2.7 Escorts Limited
6.2.8 Tractors and Farm Equipment Limited (TAFE)
6.2.9 Kuhn Group (Subsidiary of Bucher Industries)
6.2.10 Yanmar Company Limited
A selection of companies mentioned in this report includes:
- Deere and Company
- CNH Global NV (includes New Holland and Case IH)
- AGCO Corporation (includes Massey Ferguson, Valtra, Fendt, and Challenger)
- CLAAS KGaA mbH
- Mahindra and Mahindra Corporation
- Kubota Corporation
- Escorts Limited
- Tractors and Farm Equipment Limited (TAFE)
- Kuhn Group (Subsidiary of Bucher Industries)
- Yanmar Company Limited