The global lawn and Garden Equipment Market, which includes commercial and residential equipment, is projected by Power Systems Research to reach sales of $46.16 billion by 2030. This is a projected increase of $15.96 billion dollars from 2023 to 2030, an increase of 52.8%.

The global impact of COVID-19 is stating to wane and the market is returning to a normal growth rate. Individual homeowners are still interested in lawn and garden care, just not as much as during COVID-19. More people are returning to recreational activities.

Source: Power Systems Research

Lawn & Garden Market Intelligence

John Deere has announced an enhanced self-repair solution, available initially in the U.S. through its Equipment Mobile app, enabling customers to remotely download secure software updates directly to embedded controllers on compatible 4G-connected John Deere equipment. Customers can use this enhanced solution to complete secure software updates directly to an embedded controller through a user-friendly interface using the Equipment Mobile app.

Husqvarna is introducing the first battery-powered chainsaws with a clutch. With the power equivalent of a 40cc gas engine, the T542i XP and 542i XP chainsaws can cut up to 10% more when compared to Husqvarna’s current professional 40 V battery chainsaw platform without the clutch feature. Equipped with a clutch, the new T542i XP and 542i XP provide the familiar feel of a gas-powered engine, but with less noise and no fumes.

Toro has introduced the eProStripe 560 equipped with two 60V Lithium-Ion batteries. The MatchDrive variable speed electric transmission offers a greater speed range to operators while also allowing fine-tuning to suit conditions and a consistent cut when using multiple units. The system provides three preset speeds, consistent with the mechanical drive on the ProStripe, plus an additional variable speed option.

Briggs & Stratton is launching the Vanguard Lithium-Ion 48V 1.5kWh Commercial Battery (Si1.5). This announcement comes as the company is growing its Vanguard battery portfolio to include swappable (Si Series) and fixed (Fi Series) battery pack configurations to meet a wider range of application and equipment needs. The latest in Vanguard battery technology, the Si1.5 Battery features a self-contained package with a handle on top for easy swapping between equipment on the jobsite.    PSR

Michael Aistrup is Senior Analyst for Power Systems Research

As battery technology increases, the opportunities for battery-powered equipment continue to grow, especially in the Lawn & Garden and recreational products segments. The factors of reduced weight, increased charging capacity and lower cost are making battery-powered equipment more attractive to consumers and commercial users in these segments.

Lawn & Garden. The capacity of lithium-ion battery technology to meet the horsepower needs of the homeowner and the commercial landscaper has grown significantly in the last couple of years. Battery-powered lawn and garden equipment can now match the power of traditional gas-powered lawn and garden equipment. Some brands now have available 56V which is more than double what was the standard power available. Batteries now charge quicker, last longer, and can hold a charge indefinitely.

Home Depot pledged recently that 85% of the outdoor lawn equipment it sells will be battery-powered by 2028. The company claims the transition will prevent 2,000,000 metric tons of carbon dioxide and other harmful emissions from the exhaust pipes of residential lawn equipment from being dumped into the atmosphere.

On the commercial side, the initial high costs of equipment will soon pay for itself with the reduced maintenance and fuel costs. The Inflation Reduction Act includes a tax credit for electric vehicles where commercial operators can utilize a tax credit of 30% (maximum of $7,500) on each piece of battery-powered equipment that qualifies. To qualify, a piece of equipment needs to be any commercial-grade battery-powered lawn mower weighing less than 14,000 lbs. and has a minimum battery capacity of 7kh.

Powersports. Electric Vehicles (EVs) in the recreational Powersports segment are gaining momentum, offering numerous benefits such as increased efficiency, reduced emissions, and quieter operation. Electric dirt bikes and ATVs are providing instantaneous torque and eco-friendly performance. With advancements in battery technology and the charging infrastructure, the range and longevity of electric powersports vehicles continue to improve, paving the way for a greener future.

The high initial cost associated with e-power sports vehicles could potentially hinder the electric power sports market growth, however. While EV’s offer longer-term savings through reduced fuel and maintenance expenses, their upfront purchase price is often higher compared to traditional gasoline-powered counterparts.

One of the key advantages of electric powertrains is their efficiency. E-motors convert energy into motion with higher efficiency than internal combustion engines, delivering more power to the wheels. Electric powersports vehicles also produce zero emissions, reducing the environmental impact and enabling riders to explore nature without the noise and fumes associated with gas-powered engines.

The e-batteries market has a huge potential to grow due to the rapid increase in incorporation of electronic systems in powersports vehicles and lawn and garden equipment. Lithium-ion batteries as compared to other batteries, can store very high voltage and charge per unit mass and unit volume. Lithium-ion batteries have low self-discharge, high energy density, fast charging speed, and long service life.    PSR

Michael Aistrup is Senior Analyst at Power Systems Research

Lawn and garden equipment manufacturers make powered lawn and garden equipment, primarily for household and business maintenance of lawns and gardens. Equipment manufactured by this industry includes lawn tractors, riding and standing mowers, hedge trimmers, leaf blowers, woodchippers and other machinery for maintaining lawns and gardens.

Industry Trends. Increased per household spending on lawn care and gardening services by the American family, younger individuals purchasing residential property, easing of COVID-19 restrictions and other factors like lawns adding to the aesthetic appeal of the residential property, is anticipated to bolster the DIY and commercial lawn care market.

Here is a look at the key factors affecting this segment moving forward. 

• COVID-19 and related supply chain issues and labor disruptions will continue to impact flow in factories during the first part of 2024 but will ease towards the end of the year.
• The global economy is still facing significant uncertainty, says Briggs & Stratton Vanguard Vice President of Electrification David Frank. A lot of this uncertainty is driven by ongoing supply chain challenges, transportation bottlenecks and onshoring and labor shortages. This has led to price fluctuations and difficulty predicting costs across the supply chain.
• Capacity of lithium-ion battery technology to meet the performance needs of both the homeowner and the commercial landscaper has grown by leaps and bounds. Battery technology can match the power of traditional gasoline-powered lawn and garden equipment.
  • Robotics Increase. According to a recent market study by Future Market Insights, the robotic lawn mower market is projected to progress at a compound annual growth rate (CAGR) of 12.5%. Sales of robotic lawn mowers are expected to remain concentrated in residential use, but sales in the commercial segment are projected to experience significant growth over the coming years. GPS and Bluetooth-enabled robotic lawn mowers and wireless mobile devices are potential investment options for manufacturers.

Summary. The lawn care industry is experiencing growing demand for residential outdoor landscaping from younger households across the country. Increased interest in gardens in residential constructions primarily contributes to the expansion and growth of the lawn care market. Increased gardening activities, driven by the need for self-sufficiency in growing indoor fruits and vegetables amidst rising health consciousness, have called for landscaping needs by the younger generation.

Most people tend to pay additional amounts for a residential space or an apartment with a gardening area. Thus, the demand for landscaping is on the rise as developers provide an aesthetic appeal to commercial and residential properties. Trends in the residential and nonresidential real estate markets directly affect demand for lawn and garden equipment, with demand for equipment rising when the number of houses and offices grows.

Despite global supply chain issues and a raging pandemic, key players in the DIY & Hardware Store market experienced double-digit year-over-year growth. These numbers are the result of COVID-19 restrictions, which required many people to stay home and provided them with the opportunity to carry out home improvement activities. A note of caution: industry analysts are beginning to question whether this increasing interest in DIY activities will continue as COVID-19 becomes less of an issue.  PSR

Michael Aistrup is Senior Analyst for Power Systems Research

In recent years, there has been a noticeable shift towards environmentally friendly and energy-efficient outdoor power equipment in the global market. This shift is evident in both the consumer and the construction markets. Battery-powered tools have gained popularity because of their lower emissions, reduced noise levels, and convenience.

Listed below are several trends developing in the outdoor power equipment global market.

• An increase in reliance on robots because of the development of AI technology.
  • The global market for smartphones has grown significantly which has led to the creation of robotic lawnmowers for both personal and business purposes that can be operated using smartphones.
  • Several companies are developing robotic mowers driven by the rising demand for technologically advanced mowers. The latest automated lawn mowers are equipped with GPS tracking and remote controls, making it easier for the user to operate, monitor, and track the mower.
• Demand driven by increased gardening grows.
  • The garden and lawn industry is adapting to consumer requirements by launching equipment that is lighter in weight and makes work easier.
  • The gardening trend has increased rapidly, mainly among younger homeowners. They are more likely to live in smaller yards and will require equipment for tighter spaces.
  • Maintaining and enhancing outdoor spaces will fuel the need for efficient and powerful tools.
  • Home improvement projects will continue to grow in popularity, and the stay-at-home trend due to the pandemic has extended the gardening season.
• Maintenance costs will increase. These costs include regular inspection of cords and switches, and routine sharpening, oiling, and other repairs. The maintenance cost of outdoor power equipment is relatively high and could slow growth.
• Government regulations will be enacted to address gasoline-powered environmental issues.
  • Professional landscaping service providers operating within municipalities, hospitality, office, state entities, and customers with indoor projects are looking to produce zero exhaust emissions and quieter equipment to expand working hours in public spaces.  
  • California is expected to ban gas-powered chainsaws, lawnmowers, and leaf blowers as early as 2024.
• The lawn mower segment will continue to capture the largest market share of the Outdoor Power Equipment market and is expected to expand, especially with battery powered mowers entering the market.
• The popularity of gardening and landscaping services will increase in the U.S. to provide an aesthetic appeal to commercial and residential lawns, and gardens. Customers are increasingly outsourcing landscaping services to maintain corporate, institutional, and residential areas.
• North America will continue to dominate the global outdoor power equipment market.

The market will continue to grow at a fast pace due to trends such as the growing popularity of home improvement projects, technology advancements and the adoption of wireless networking techniques resulting in the continued development of smart and connected tools.   PSR

Mike Aistrup is Senior Analyst at Power Systems Research

Power Systems Research (PSR) projects the global outdoor power equipment market to grow from $34.01 billion in 2021 to $48.91 billion by 2028, a CAGR of 5.34% over the forecast period. The outdoor power equipment market includes consumer and commercial lawn mowers, chain saws, leaf blowers, and other motorized equipment used in the upkeep of lawn and gardens.

Global trends.North America is expected to dominate the market because of the growth of commercial and residential lawns and parks. The market in North America stood at $13.7 billion in 2021 and is expected to gain a huge portion of the global market share.

In Europe, continued automation in the lawn mower segment will increase demand for automated residential lawn mowers.

In Asia Pacific, growing population and rapid development of the residential and commercial building are expected to increase the demand for outdoor power equipment.

Listed below is the forecasted revenue and CAGR for the global outdoor power equipment market:

Global trends.North America is expected to dominate the market because of the growth of commercial and residential lawns and parks. The market in North America stood at $13.7 billion in 2021 and is expected to gain a huge portion of the global market share.

In Europe, continued automation in the lawn mower segment will increase demand for automated residential lawn mowers.

In Asia Pacific, growing population and rapid development of the residential and commercial building are expected to increase the demand for outdoor power equipment.

Demand Drivers. The market for outdoor power equipment is mature, and its growth is mostly influenced by variables such as population and age distribution, consumer spending, housing and  construction, location, and recreational and leisure activities. In addition, technology, price trends, environmental and regulatory challenges, and trade activities all play a part.

Here are some of the leading demand drivers:

• Increasing desire for outdoor power equipment as people seek greater flexibility and portability, especially in battery-powered outdoor power equipment for lawn maintenance and gardening activities.
• Growth of urbanization and home building.
• Increasing disposable income. Homeowners in developed countries are investing more time and money in outdoor and gardening activities.
• Growing demand by homeowners and owners of commercial properties for landscaping services to boost curb appeal and value.
• Expanding infrastructure activities coupled with related demand for landscaping services. A wide range of outdoor power equipment, lawn mowers, hedge trimmers, blowers, and saws, are needed in new landscaping activities.

Product Segmentation. Lawn Mowers are the most used outdoor power equipment. The growing demand for lawn mowers is tied to the increasing demand of residential users for lawn and garden care activities and landscaping services. Other major end users of lawn mowers include municipalities and landscaping service providers

Analysis. The outdoor power equipment market is experiencing a shift toward battery technology and to a lesser extent robotics. The demand for alternative sources of power is gaining market share with many new introductions of equipment. In the US, robotic lawn mowers are slowly gaining market share, while electric lawn mowers are proving to cost-effective and provide the torque for landscaping use. PSR

Mike Aistrup is a Senior Analyst at Power Systems Research

This information comes from industry interviews and from two proprietary databases maintained by Power Systems Research: EnginLink , which provides information on engines, and OE Link, a database of equipment manufacturers.

Market Share:  With 39% of total units produced, Husqvarna leads in production of Lawn & Garden Tractors in North America.  In second position, with combined plant totals, is MTD with 33.5%; third, also with combined plant totals, is Deere & Co. with 23.5%.    

Trends: In 2021 production of Lawn & Garden Tractors in North America (US) increased 4.5% over 2020 to 683,250 units.   Production in 2022 is expected to reach 709,700 units, a gain of 4.5%, compared to 2021.  The forecasted gain is driven by the demand for new fuel-efficient models in the market along with the demand for new equipment. 

Production has been slowed somewhat by the temporary lull in production of the Craftsman line, the saturation of new products in the market, and the unfavorable mowing conditions caused by the wet spring. 

The latest models offer a variety of features for homebuyers based on yard size. Entry-level lawn riders are suited for 1.5 acres or less and usually have 1-cylider engines.  Mid-grade riders have twin cylinder engines with high HP’s that work well in large cutting areas. 

Production is expected increase up to 5% by 2025; lifespan of this product has about a 10-year turnover.  PSR

Carol Turner, is Senior Analyst, Global Operations, for Power Systems Research

SUMMARY.  The global economy performed very well in 2021 and continues to recover, along with trade, employment and incomes. But the revival is unbalanced, with regions/countries, businesses and people facing very different economic realities. Recent improvements also conceal structural changes, which means that some sectors, jobs, and technologies will not return to their pre-pandemic trends. Based on the most recent economic developments and trends, Power Systems Research remains somewhat optimistic about the global recovery.

Many of us hoped to be in the post-Covid phase by now, but it is evident that there is no quick way out.  The pandemic has had a profound impact on the world economy, and it will continue to challenge established norms of life and business into the foreseeable future.  As we start the new year, many challenges remain, new and old alike: re-surgency of COVID variants, restrictions on travel, supply chain challenges, shortages of materials/goods, inflation, and employment, as well as renewed geopolitical tensions across many parts of the globe.

Power Systems Research witnessed a strong economic recovery globally in 2021, despite regional differences.  Output in most OECD countries has now either surpassed or is about to reach pre-pandemic levels, but lower-income economies, particularly those where vaccination rates are low, are at risk of being left behind.  Furthermore, the rebound will continue to vary widely among different market segments.  

Global inflation re-surfaced in 2021 and presents a real risk to economic recovery in all regions. The renewed inflationary pressure risks lasting longer than was expected a few months ago.  The surge in retail and wholesale energy costs in late 2021 will undermine economic growth prospects for large parts of Europe and Northeast Asia well into 2022.  Rising food and energy prices already have impact on low-income households in particular. 

Government support in the form of fiscal policies and public health management are driving the economic rebound and largely explain variations in performance across countries. With the targeted monetary support to consumers and certain industries, the demand for products and services globally bounced back in 2021, and we expect this trend to continue in 2022. 

The overall economic recovery performance has been universal and shows a positive trend globally, but how, when and if specific countries will rebound remains unclear.  According to a report from the Organization for Economic Co-operation and Development as of December 1, 2021, global GDP growth was on track to be 5.6% in 2021, a downward revision of 0.1% since September 2021.  According to the OECD report, GDP has already risen above its pre-pandemic level, but the recovery remains uneven with countries emerging from the crisis facing different challenges.  

For the global outlook in 2022, the OECD left its forecast unchanged since September at 4.5 %. 

To briefly summarize the global industrial outlook for 2022, despite ongoing challenges, it is clear that every market segment globally will continue on the recovery path and show positive growth vs. 2021. 

Among all industry segments on the global scale, the On-Highway segments such as Minivan/SUVs and Passenger Cars are expected to grow at 4.7—5.7% globally in 2022.  This rate is slightly improved from last quarter projections due to the expected improvement in supply chains.  The car industry is one of the major manufacturing sectors being hit by shortages of intermediate goods such as semiconductors, and by bottlenecks in shipping and metals. Car production and sales have been struggling to meet the demand globally while prices for both new and used vehicles have risen in a number of countries.

Following a rapid deterioration of production levels in 2020, we expect global demand and production to continue to increase across the board in 2022, averaging 5.6% vs 2021 among all market segments, which is slightly lower than our previous projection from Q3 2021 (at 7.4%). The decrease in growth expectations is primarily driven by higher inflation rates, ongoing supply chain challenges as well as increased tension with global political agenda.

AGRICULTURAL. In comparison to all other industries, the agricultural machinery segment performed well during the pandemic.  Last year, globally, the segment showed almost 10% growth vs. 2020.   We expect growth to continue for the next few years. However, the growth rates will be slower than in 2021.  We estimate the industry will add 2.8% globally, which is lower by 1.4% from previous Q3 2021 estimates.  Overall equipment production volumes are smaller mainly due to changes in farming practices and are driven by the transition to larger equipment and machines. 

CONSTRUCTION. The global Construction machinery sector showed a strong rebound last year at 9.5%  vs 2020 and is well positioned for continues growth over the next few years.

As we expected, the growth in economic activities regained ground last year; currently, we estimate the global construction equipment market will grow 5.7% in 2022 vs. 2021.  This estimate is higher from the previously forecasted growth from three months ago by about 1.8%

In terms of 2022 growth trends among regions, South/Central America, North America, and India will post the highest recovery rates in 2022 vs 2021, at +16%, 10% and +8.5%, respectively.  The estimates for this sector are slightly improved from our previous quarter projections (Q3 2021).

Other Off-Highway segments, such as Industrial, Lawn and Garden and Power Generation, closely followed the latest global economic conditions last year and we expect the growth will follow the general recover trend as well. We estimate that recovery growth in 2022 vs 2021 in these segments will be +11.3%, +9.1% and 8.6%, respectively. 

For Industrial and Lawn and Garden segments, these estimates are slightly improved from our previous numbers from Q3 2021.  The Power Generation market made much bigger improvements in activities during past quarter.  At the same time, we do not expect any significant growth in this sector, and we see it averaging 5-6% over the next few years.

For the On-Highway sectors in 2021, we saw a solid recovery in production volumes across all product classifications, despite major supply chain disruptions.  Cumulatively, across all on-highway sectors the overall rebound was 4.6% in 2021 vs 2020.  As economic activity rebounds, we expect this trend across all product categories to accelerate in 2022.  The Passenger Cars segment contributes almost 40% of the volume to the overall on-highway vehicles segment.  We estimate a solid gain in growth in 2022 vs 2021 at 5.1% globally, which is lower by 1.5% from the previous estimates, mainly due to overall slower economic projections for 2022.

Passenger Cars The car industry is one of the major manufacturing sectors being hit by shortages of intermediate goods such as semiconductors, and by bottlenecks in shipping and metals. Car production and sales have fallen globally while prices for both new and used vehicles have risen in a number of countries.

Globally, passenger car production is expected to grow at 5.7% in 2022 vs. 2021.  India, Europe, North America, and South/Central America will contribute the most to the increase with rates of 9.6%, 6.6%, 10.1 % and 26.7%, respectively.  Brazil and India are estimated to grow faster than other countries, mainly due to emerging market conditions.  Furthermore, we will continue to see a transitioning trend towards SUVs, which will further impact growth in the passenger cars market.

Recreational Products. This segment follows consumer-oriented products, and the pandemic has provided new opportunities, mainly due to the lock downs and improved work/life balance.  Last year, this segment posted a 6.6% gain vs. 2020 and we expect the growth to continue at 4.5% in 2022 vs 2021. 

Regionally, we expect North America and South/Central America to lead the growth in 2022 at 15.3%, and 39.3% vs 2021, respectively.   PSR

Yosyf Sheremeta, PhD, is Director of Product Management and Customer Experience at Power Systems Research

In addition to lawn tractors such as the Cub Cadet, MTD also makes push lawn mowers, snow blowers, robotic lawn mowers, outdoor power equipment and garden tools.

MTD employs 7,500 people and generated more than $2.5 billion in revenue in the past 12 months. Stanley Black & Decker has 56,000 employees in 60 countries around the world. The tool and storage manufacturing company posted $14.5 billion in revenue in 2020.

The companies expects the deal to close this year and anticipates the combined company will save $100 million in cumulative annual costs by 2025.

Stanley Black & Decker also announced that it has entered into a definitive agreement to acquire Excel Industries for $375 million in cash. 

Excel is a designer and manufacturer of premium commercial and residential turf-care equipment under the distinct brands of Hustler Turf Equipment (Hustler) and BigDog Mower Co. (BigDog). With over $375 million of revenue forecasted in 2021, Excel serves approximately 1,400 active independent equipment dealer outlets that stock, sell and service Hustler and BigDog products in the United States and Canada. The Company is located in Hesston, Kan., and has approximately 600 employees.  PSR

Michael Aistrup is Senior Analyst at Power Systems Research

SUMMARY.  After the GDP declined 3.5% last year, the worst performance in almost 75 years, the US economy is set for a strong comeback.  There are many reasons to be optimistic about the economy for the next few years, including strong readings of macro-economic factors combined with the economic cycle reset backed by government initiatives and policies.

Our positive outlook is based on the reviews of key economic indicators, including GDP, unemployment, and inflation. 

During H1 2021, we witnessed a strong level of activities and a rebound for many industries.  As local governments eased lockdown restrictions, service-oriented industries gained traction and that translated to an overall increase of economic activities across many industries. 

We expect this level of rebound to continue and we now expect even stronger overall growth for 2021.  The US economy is on track to reach or even surpass the growth level of 1984 – the highest one since 1950s.  In the near term, consumer spending will help drive demand and support the strong growth trend.

Many factors contribute to such upbeat projections.  Strong macro-economic data provided a solid basis for future growth.  Government stimulus to consumers as well as businesses combined with investments into a sustainable economy, and technology development will continue to drive demand in the near term.  A future infrastructure bill will also serve as a catalyst to generate new demand and continue the economic expansion for several years.

We have mentioned the electrification trend of vehicles and equipment in the past.  We expect these developments and trends to accelerate in the near future.  In particular, we expect new developments in battery technology, and also with hydrogen power.  The impact of this electrification will touch a majority of the applications/products that we track in our databases.  We already see viable alternatives to ICE powered products entering the market during the next 12-36 months, and this trend will accelerate in the mid-term.

We continue to see a favorable fiscal policy and a stable economic situation in the US.  At this time, we expect it will take at least until 2022-2023 before GDP surpasses its Q4 2019 peak.   Fiscal policy with near zero interest rates, which government has promised to keep in place for the next 12 months, will provide a good platform for the economic recovery and allow us to look optimistically into 2022.  We believe this is a critical factor as it re-assures both consumers and businesses of low interest rates and it helps drive demand for goods and services.  Even then, once the interest rates are lifted from the flat zero levels, we believe they will still provide favorable conditions to continue economic expansion.

The key factor and the foundation to the economic recovery is strong fiscal policy.  With extra cash in the hands of US consumers, combined with low interest rates, and strong growth expectations, inflation concerns have re-surfaced in H1 2021. As of June 2021, annual inflation for the 12 months ending in May was at 4.99%.  In just one month the inflation rate increased by 0.83% from 4.16% as of April 2021.

Increased inflation concerns have put a break on stock market growth, especially to growth-oriented companies such as the technology sector. However, given the current macroeconomic levels, we do not expect any significant change to fiscal policy (such as interest rate increases) this year.  Current conditions provide a solid outlook and reassurance for future recovery and growth at least for another 12-18 months.

We have mentioned significant improvements on the employment market during last 6-9 months, however the trend experienced a slowdown in early Spring 2021.  The latest readings from June 4, 2021, showed the unemployment rate at 5.8%.  While the rate improved from Q1 2021, (April 2021) at 6.2%, it is still significantly higher than the pre-pandemic rating in February 2020 of 3.5%.

The number of unemployed persons as of June 2020 was at 9.3 million vs. 10 million in March 2021 and 5.7 million in February 2020.  We expect the employment market to continue to improve in the H2 2021; it may take at least another year and a favorable economic situation to fully recover employment to the rate of 3.5%-4.5%.  The labor force participation rate was little changed at 61.6 %in May 2021.

Housing starts statistics experienced a slowdown in Q1 2021, however they rebounded during Q2 2021 at 1.572 million in May of 2021.   The building materials market continued to experience pricing pressure as well as supply chain issues which slowed growth.  We expect this trend to continue in the near future.  Another factor that contributed to the slowdown was rising mortgage rates, primarily driven by a rise in Treasuries.  However, given the strong outlook for the economy, we expect the housing market to remain strong, which will directly help drive growth in segments like Construction, Industrial and L&G.

Across all market segments, we expect overall total OEM equipment production numbers to rebound in 2021 from 2020 losses.  Cumulatively, OEM production in the US experienced a decline of 13.1% in 2020 vs. 2019.  We expect growth in 2021 of 8.0% vs 2019.  This estimate is slightly lower by 0.1% than the previous estimates in Q1 2021 at 8.1%, mainly due to the slower recover pace in the Spring of 2021.  The key driver of the growth in 2021 will be strong fiscal policy and accelerated growth in H2 2021.  At the same time, the recovery and growth will vary considerably among segments. 

As expected long before the pandemic, the Medium and Heavy Vehicles Segment was due for a slowdown and a reset.  This segment in 2020 suffered the worst performance among all industry segments; however, it will also lead the recovery in 2021 and will post the highest growth rate at 30.5% vs significant loses in 2020.  We continue to see significant improvements in this segment with sustainable demand over the next 18-24 months.  Furthermore, we estimate an additional gain of 6% in 2022 vs 2021.

Consumer-oriented segments experienced significant market deterioration with the Passenger Car segment leading the decline at -25.1% in 2020 vs 2019.  The next leading segment was Minivan/SUVs at -16.3% in 2020 vs 2019.  We expect passenger car production to remain flat in North America while Minivan/SUVs to regain ground in 2021 at 10.1%.

As economic conditions improved during the last three months, we expect a rapid increase in demand for products to follow in most markets, starting in H2 2021. At this time, we forecast year 2021 growth to be in the low single digit vs 2020 at 8.0%, and we see an 9.7% additional gain in 2022 vs 2021.  Overall, for all OEM equipment sectors, we expect it will be 2023 or 2024 before the total volume units produced in North America reaches pre-pandemic levels of Q4 2019.

Here are our views on several key industrial segments.

AGRICULTURAL.  As the post-pandemic recovery continues, we expect the Ag segment to follow other industrial and heavy equipment industries.  In 2021, we project the growth of agricultural equipment and machinery in North America to be at 9.8% vs 2020. Additional growth is projected for 2022 at 13%.  The recovery will be steady, and we expect levels of production in 2022 to reach those of 2016-2017. 

CONSTRUCTION EQUIPMENT. We expect the Construction machinery segment to follow strong economic recovery patterns.  Our most recent overall projection on construction equipment and machinery production is positive at 8.9% in 2021 vs 2020, which is slightly higher than Q1 2021 estimates.  Furthermore, we expect additional growth of 9.7% in 2022. 

INDUSTRIAL. This segment typically follows the general economy, and the construction industry trends, with some minor equipment exceptions, such as forklifts.  Currently, we expect an overall growth in production numbers at 9.6% in 2021 vs 2020 with additional growth of 12.4% in 2022. 

The main drivers for the segment are small industrial equipment, material handling and forklift applications, where the demand remains strong.   Furthermore, material handling is supported by stronger levels of freight, and we expect this trend to continue in 2021-2022.

Consumer sectors, including LAWN AND GARDEN, PASSENGER CARS, MINIVANS AND SUVs as well as RECREATIONAL PRODUCTS look very promising for the next few years.  Not only have these segments entered a new cyclical uptrend, but they will also benefit from favorable fiscal policy and increased demand driven by the economy re-opening.

LAWN AND GARDEN. This segment typically follows a similar pattern to other consumer products; however, given the circumstances related to lockdown, the L&G sector performed very well in 2020 (production was flat in comparison to 2019).  We estimate L&G to continue strong performance, driven by healthy demand at 6.8% in 2021 vs. 2020 with additional growth of 9.9% in 2022. During the past year, the segment has suffered supply chain issues. 

During the past few quarters, we have been gathering intelligence on new electric models, and we will be completing data and releasing them to our client databases over the next few quarters.   Given current market circumstances and the trend in the industry, we believe electric models will follow similar growth rates to its ICE units and will greatly gain market share at the expense of ICE-powered equipment.

PASSENGER CARS and MINIVAN/SUVS. Strong demand supported by low interest rates and a re-opening of the economy will help these segments regain ground in 2021.  At the moment, we expect the segment to show healthy growth in 2021, mainly due to a low base in 2020.

However, given the current trend, specifically the market transitioning to SUVs, the production volumes of passenger cars may never fully come back to the levels of 2016-2017.  We estimate production for passenger cars to be flat in 2021.  Additional growth of 10.7% and 7.8% is expected in 2022 and 2023, respectively.

Over the past few years, the Minivans/SUVs segment has been enjoying growth and taking share from passenger cars. Nevertheless, the overall production has declined at 16.3% in 2020 vs 2019.  We estimate the rebound in 2021 to be at 10.1% vs 2020.  Steady recovery next year is estimated to continue in the following years at 10.9 and 6% in 2022 and 2023, respectively.

We have already started to witness introduction of EV technology across all major OEMs, and we expect this trend to significantly accelerate in the next 2-4 years. 

POWER GENERATION. This segment will mainly follow other industrial segments and will gain 8.1% in 2021 after being almost flat in 2020 vs. 2019.  The recovery will mainly depend on improved economic conditions in the region and worldwide.  We expect the segment to continue to improve in 2022 at 8.9% vs. 2021.  Key demand drivers for the segment come from data centers, healthcare, and infrastructure development.

RECREATIONAL VEHICLES. Recreational Products follow similar patterns to other consumer products; however, the pandemic provided a solid growth boost for the segment.  We project a strong year at 9.8% growth in 2021 vs 2020, and 8.5% in 2022 vs 2021.  PSR 

Yosyf Sheremeta, PhD, is Director, Product Management & Customer Support, for Power Systems Research

Source: The Nikkei

PSR Analysis: I visited Makita’s booth at the Agri Week exhibition in October. Engine models were not on exhibit and had been removed from their catalog. HIKOKI had the same situation. I forecast that battery models will account for more than 95% of the total hand tool market in 2021.

This is a sign that battery models have evolved to a level comparable to engine models, even in the power-demanding products. The engine model has a better ability in terms of long hours of continuous operation, but this is not a reason to extend the life of the engine model. Long working hours can be done by simply replacing the batteries. The fact that these batteries can be shared across a wide range of products, from chainsaws to impact drivers, has prompted the company to seek user understanding by introducing sales methods that offer lower unit prices when multiple batteries are purchased at once.   PSR

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