What does 2024 look like for construction equipment sales?

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That’s according to Off-Highway Research’s managing director Chris Sleight, who has shared his views with the Construction Briefing on what the coming year could bring.

“Looking back, the peak year globally was 2021 and that was mostly driven by a boom in China,” says Sleight.

“In 2022, everywhere else in the world peaked and China had fallen quite significantly. In 2023, there was a cooling down. In the first half of the year, everyone had full order books and in the second half, orders fell and the backlogs were worked out.”

But it wasn’t the same picture everywhere – there were exceptions where equipment sales continued strongly, perhaps surprisingly so.

“One was India, where there had been a couple of false starts to the recovery and 2023 was the year where it finally got going,” Sleight explains.

“The other, which was more surprising, was North America. It looked like rising inflation and interest rates would slow the market down in 2023 but in the end it looked like it was at least as good as 2022 and may even have grown year on year.”

What drove America in 2022 was house building. But 2023 saw a strong surge in the construction of manufacturing facilities driven by the CHIPS Act, as well as some reshoring of production from China, even as house building cooled.

“And if it wasn’t for the boom in this sort of non-residential building, then the headline in North America would have been infrastructure construction, which has ticked upwards very nicely with the Bipartisan Infrastructure Law and the Inflation Reduction Act,” Sleight adds.

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Outlook for 2024

North America’s resilience compares favourably with Europe, where inflation has been more of a challenge.

But in general, Sleight expects a further cooling of global construction equipment markets in 2024.

A slowdown this year could be in the order of 5% to 10% fall in the volume of sales, although Sleight is quick to point out that this isn’t abnormal in an industry that is, by nature, cyclical.

“To put that into context, it would still be one of the five or six best-ever years that the construction equipment has seen [in terms of sales volume],” he adds.

There will be pockets of growth, he predicts, but sales in most major markets are likely to remain flat or slow down.

“Europe is going to slow down or be flat, with the possible exception of some of the southern European markets where some equipment fleets are getting extremely old,” he says.

“India’s going to fall a little bit but that is not an economic problem – that is the disruption caused by the general election later in the year. China is very hard to call but the problem there is the real estate industry, which was meant to have been sorted out 18 months ago but from which the bad news keeps coming.”

And as far as North America is concerned, Sleight would be surprised if equipment sales there grow, given the high level they have already reached.

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“It really is unprecedented and if it grew again, I think we’d have concerns that it was starting to look like a bubble,” he cautions.

When it comes to emerging markets in South East Asia, parts of Latin America and the Middle East, he notes that commodity prices are starting to cool down, which means that equipment markets, often interlinked, are also likely to cool.

While that could be taken as a gloomy picture, Sleight reiterates that it is a normal part of the ebb and flow of machinery sales. “The volume of sales will still be extremely good in 2024,” he concludes.

“The construction equipment market is cyclical and this is just a normal downturn in the cycle. We don’t particularly see anything to be alarmed about or anything out of the ordinary.”

The possible exception to that could be China, where the fallout from the collapse of major property developer Evergrande continues to rumble on.

In December, the company, which faces liquidation, unexpectedly won more time to restructure its $300 billion in debt.

With its case in the Hong Kong courts now adjourned until 29 January, the uncertainty around how China’s property market crisis resolves itself continues.

And that in turn makes predictions about the demand for construction equipment tricky to make.