CEMA (The Japan Construction Equipment Manufacturers Association) said it expects domestic shipments of construction equipment in fiscal 2025 to decline 3% YOY to US$ 19.65 billion (2.8488 trillion yen). This reflects declining capital investment sentiment due to rising interest rates and the impact of the Trump administration’s tariff policies.
Exports are also expected to decline by 3%, reaching US$ 13.60 billion (1.9717 trillion yen). Sales of hydraulic and mini excavators, the mainstay products, are expected to decline. Domestic sales are expected to decrease by 4%, down US$ 365.5million (52.9 billion yen) from the previous forecast, to US$ 6.05 billion USD (877.1 billion yen). Companies are expected to reduce their capital investment due to concerns about increased borrowing costs associated with rising interest rates.
Akira Yamamoto, chairman of KOBELCO Construction Machinery, said, “The reality is that the construction industry is struggling. In Japan, projects are not moving forward due to soaring steel prices and labor shortages. Overseas, interest rate cuts have not yet translated into demand.”
The North American market, which has been driving global demand, is being affected by U.S. tariffs. In a survey of member companies about North American demand trends, 58% responded that demand would “decrease” in fiscal year 2025, 33% said it would remain “flat,” and only 9% expected an increase.
Source: The Nikkei
PSR Analysis: The automotive sector will be the hardest hit by U.S. tariffs, but the construction machinery sector will also be impacted. Komatsu generates approximately 30% of its sales in the North American market, and Hitachi Construction Machinery forecasts a 15% year-on-year decline in North American demand.
Many manufacturers are planning countermeasures, such as strengthening their rental businesses (which are less affected by sales), restructuring their supply chains, and raising sales prices. However, there are concerns that these costs could dampen demand for housing construction and infrastructure development. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
