GLOBAL REPORT
SUMMARY. There are several factors that could contribute to modest growth in the second half of this year as we await final numbers for the quarter. This should lead to total production globally growing at +2.6% in 2023 (vs 2022). Given this 2023 growth, the outlook for the years into 2028 remains positive.
Apart from Russia and Ukraine, the main country to show a decline is South Korea, while Japan is barely positive. However, the segment picture shows some differences.
- Fuel prices have eased recently, but they remain a serious concern.
- Supply chains remain constrained.
- The war in Ukraine shows no sign of a speedy conclusion, despite recent successes by Ukraine.
- Ukrainian exports of wheat, other grains and fertilizer continue but are still low compared to pre-war levels.
- Inflation continues to be a concern and central banks are raising their interest rates. This will pose a risk to economic growth in all regions. Inflation and price increases are putting OEMs in a tricky situation.
- Risk of recession appears in several countries including the USA and Germany.
- Covid is still lingering with global deaths now at over 6.9 million, but the death rate has slowed considerably.
- Latent demand for machinery keeps bursting out into the open.
AGRICULTURAL. The Agricultural sector is showing mixed signs with an overall decline in 2023 (-4.4%) but with growth expected in 2024. Apart from Russia and Ukraine, China declines in 2023, but then recovers, while South Korea and Japan both are forecast to decline in 2023 and 2024 before recovering to positive growth. The other major Agricultural countries (India, Germany, Italy, and United States) remain positive throughout the time period.
CONSTRUCTION. The global construction equipment sector is expected to decline -2.8% in 2023 but is expected to bounce back in 2024 and for the rest of the forecast period. In 2023, China (-11.9%), USA (-3.8%) and India are expected to decline in2024 (it’s an election year). From 2024 all the major construction countries are expected to be positive.
INDUSTRIAL. TheIndustrial segment is expected to maintain positive growth throughout the forecast period with 2023 and 2024 growing at 1.6% and 2.2%, respectively. All the top five countries are expected to be positive throughout the forecast period, but Mexico is expected to decline in 2023 and 2024 before remaining relatively flat from there on.
LAWN & GARDEN. Lawn & Garden is expected to maintain positive growth throughout the forecast period with growth of between 1.8% and 5%. The top five countries (United States, China, Germany, Sweden and Italy) show mixed results with only Italy suffering modest declines in 2023 (-0.1%) and 2024 (-1.6%). Otherwise, growth is positive. Of the countries with smaller volumes, Slovakia is expected to continue to decline throughout the period.
LIGHT COMMERCIAL VEHICLES. This segment is expected to maintain positive growth throughout the forecast period with growth of between 2.0% and 3.7%. Of the top two countries, only China maintains positive growth throughout, while the other majors have mixed results, and five countries show a decline in 2023 (USA, Japan, Thailand, Germany and France).
MARINE AUXILIARY/MARINE PROPULSION. After a strong recovery in 2021and 2022, the Marine segment is expected to show growth from 0.9% to 1.9% during the years to 2028. Of the two major producing countries Japan’s growth ranges from 0.5% to +3.1%, while the USA ranges from -0.4% to +2%
MEDIUM & HEAVY VEHICLES. This segment is expected to grow in 2023 (+3.0%) but the outlook for the remaining years shows that growth is a bit erratic as it ranges from -2.2% (in 2024 to +4.8% in 2025. The world’s largest producing country (China) remains strongly positive during the forecast period with growth ranging from 3.0% to 7.9%.
PASSENGER CARS/MINIVANS & SUVs. These segments were heavily affected by the pandemic, but despite this situation growth in 2023 is expected to be +2.6% and remain positive through the rest of the forecast period with growth of 3.0% to 4.8%. Of the top five countries (China, United States, Japan, India and Germany), only Japan shows any decline (-0.3% in 2023 during the rest of the period.
POWER GENERATION. Power generation is expected to grow strongly during the forecast period with growth ranging from +2.1% to +4.8%. All the top 10 power generation countries show good growth for every year of the forecast period with growth figures ranging between +0.7% and +10.0%
RAILWAY. Global railway production is expected to grow through 2028. The next years (2023-2028) should average around growth rates between +4.5% to 7.1% and mostly following standard cyclical replacement rates. There will also be a push to move to more alternative drive types at that time as well.
RECREATIONAL PRODUCTS. This segment follows consumer products and includes items such as motorcycles, ATVs, scooters, personal watercraft, and snowmobiles. Now, with higher inflation and rising costs, 2023 market’s growth is slowing to +3.0%. Growth rates for the next years are driven by China and India which dominate the market (over 80% share) and will remain in the range of +3.0% to +4.4%.
The key factors to better performance in recreational products are low cost affordable personal transportation, significant demand for these products, the impact of electrification and higher consumer spending with more disposable income.
ALTERNATIVE POWER. After growth of +7.6% in 2022, Battery Electric is expected to grow between +6.6% and +12.5% throughout the forecast period, while ICE growth rates start the period at +2.0% (in 2023) and then grow sporadically between +1.2% and +2.3%. Battery Electric is expected to grow from 14.0% of the market in 2023 to 20.5% by 2028, while during the same period ICEs are expected to decline from 83.5% of the market to 75.7%. PSR
Guy Youngs Is Forecast & Adoption Lead at Power Systems Research
