The North America and Europe farm tractor market features a high degree of competition due to the strong foothold of large players. The top three players in the market, namely Deere and Company, CNH Industrial, and AGCO Corporation, cumulatively represented 69.7% of the overall market in 2015.
Transparency Market Research (TMR) observes that the leading players due to their strong capital muscle are able to pour hefty funds into research and development of technologically advanced products, which helps them in retaining their prominence. This along with their established brand identity and rigid industry standards are creating high entry barriers for new players. The North America and Europe market for farm tractors is poised to rise to a valuation of US$17.23 bn by the end of 2024 from US$13.6 bn in 2015.
U.S. to Hold Lion’s Share in North America through 2024
The North America market for farm tractors is expected to rise to a value of US$11.57 bn by 2024. The growth of the region can be attributed to the soaring demand for less than 40 HP farm tractors. The U.S. will be the leading revenue contributor and will retain its position until 2024, accounting for over 79% of the market in North America.
According to the findings of the report, the Europe farm tractor market had witnessed a decline in the revenue from 2015 to 2016. However, the market is anticipated to pick up its pace post 2016, expanding at a CAGR of 5.4% in terms of revenue during the forecast period.
Growing Trend of Mechanization Boosts Demand for Farm Tractors
The rapidly growing population is leading to the increase in agricultural activities. Favorable government policies are also encouraging agricultural activities by providing subsidies for agro machinery and farming-related equipment. This, in turn, is working in favor of the North America and Europe farm tractor market.
In recent times, North America and Europe are experiencing a rise in the mechanization of farming activities. “Mechanization offers several benefits such as increased efficiency, better time and resource saving, and amplified production,” says a TMR analyst. Therefore, the rising trend of mechanization is stoking the growth of the market. Moreover, the surge in hobby farming is translating into the greater uptake of low- and medium-HP tractors, thereby providing a significant boost to the growth of the market.
Stringent Emission Norms Take its Toll on Market
Regulatory authorities such as the U.S. Environmental Protection Agency (EPA) and the European Union (EU) have imposed strict emission norms for diesel engines that are particularly deployed in nonroad vehicles. As a result, tractor manufacturers are compelled to incur additional cost to adhere to these stringent regulations. This, in turn, is hampering the growth prospects of the farm tractor market in North America and Europe. Furthermore, tractor manufacturing and maintenance is highly capital intensive. The high cost of farm tractors is prompting farmers to purchase second-hand tractors. The increase in this practice is adversely affecting the overall revenue generation of the market. However, rapid technological advancements along with rising acceptance of advanced agricultural machinery are opening new avenues for the participants in the market.