News: Construction

JAPAN REPORT

Kubota says it plans to build a factory in Germany to manufacture small excavators. Production will begin in 2026, and the new factory will increase the local subsidiary’s production capacity by 40%. Kubota will acquire a factory site near the current factory of Kubota Baumaschinen, which manufactures and sells construction equipment in Germany. In the fiscal year ending December 2022, sales of construction equipment in Europe accounted for 20% of the company’s total sales in this sector, behind North America and Australia, which accounted for 60%.

Demand for small construction equipment in Europe is currently sluggish. In the first nine months of fiscal 2024, sales of construction equipment in Europe declined 29.1 billion yen from the same period a year earlier.

Kubota says the reason for building a new plant despite the sluggish demand for construction equipment is that the market has bottomed out.

Source: The Nikkei

PSR Analysis: In Germany, Kubota has held the leading market share for its main product, mini excavators, for 20 years. Although the construction equipment market is currently sluggish, this move can be seen as an investment in anticipation of an upturn in demand in the medium to long term. The EU has the most stringent exhaust regulations, and acceptance in such a market demonstrates the company’s ability to respond to increasingly stringent environmental regulations in other countries. PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research