Iran Construction Equipment Market - Strategic Assessment and Forecast 2022-2028

MARKET INSIGHTS

Iran's construction equipment market was valued at USD 256.7 million in 2021 and is expected to reach USD 411.1 million by 2028, growing at a CAGR of 7.06%.

According to Arizton Advisory & Intelligence, Iran's construction equipment sales will reach around 9,029 units by 2028. Government investments in modernizing infrastructure, transport & mining industries are expected to drive the demand for construction equipment in Iran.

KEY INSIGHTS OF THE IRAN CONSTRUCTION EQUIPMENT MARKET

• Material handling equipment has the largest share in Iran compared to earthmoving & road construction equipment.
• Government investment in road construction, infrastructure development, housing projects, smart cities, and the development of Eastern and Southern Corridors will positively impact the demand for material-handling equipment in Iran.
• In 2021, the government will allocate $ 109.1 million for 53 projects across railways, aviation, and commercial building up-gradation. The infrastructure investment focuses more on the country's northern & central regions.
• The demand for equipment financing has increased post-pandemic to avoid project delays due to funding challenges. Overwhelmed by the funding challenge, OEMs such as Komatsu, Caterpillar, SANY, and Hitachi construction machinery provided financial assistance to customers.
• In 2021, there was a surge in equipment financing activities by OEMs in Iran. OEMs are focusing on maximizing benefits from the spike in demand for construction equipment in the country caused due to rise in infrastructure projects.
• Other major players, such as XCMG, Zoomlion, Kobelco, and Hyundai Construction Equipment, expect to follow a similar trend.

Upsurge In Urban Infrastructure Investment

Iran accounted for 25% of oil reserves in the Middle East and 12% of the world in 2020. Iran's crude oil production reached a 30-year low in 2020 due to the global COVID-19 pandemic. Iran's economy contracted by 7%, and the construction industry was adversely impacted due to a shortage of labor & raw material.

In 2022, Iran's government announced 48 industrial and infrastructure projects worth about $19 billion to uplift the economy post-pandemic. The Iranian government aims to complete over 3,900kms of new railways and roads by March 2022 to boost the economic activities and increase the investments in the energy, oil and gas, petrochemicals, infrastructure, and industrial sectors. Iran witnessed an investment of 78.9 million in 2021 to improve roads, railways network & construction of welfare service complexes.

In 2022, 390 infrastructure development projects will be inaugurated in the country's industrial parks and zones. Iran's government has also announced 48 industrial and infrastructure projects worth $19 billion. Thirty-one power plants with a capacity of 15,000 MW have started across the country; so far, 3,150 MW has been put into operation. In 2021, the Iran government commenced the Hormoz Gan power plant project to construct a 1,400-MW power plant in Hormoz Gan province.

Iran has a favorable business environment, an excellent administrative setup, attractive foreign policies, and an available, abundant skilled workforce and provides attractive incentives to investors. The Government of Iran has eased foreign investment norms in the construction, transport, and renewable energy sectors.

A surge in Investments in Mining, Transport & Urban Development Projects to boost the Demand For Construction Equipment.

Iran's government also announced 48 industrial and infrastructure projects worth about $19 billion in 2021 to overcome the negative impact of the pandemic. The inaugurated projects include 30 port development projects in Imam Khomeini, Bushehr, Genaveh, Chabahar, Shahid Rajaei, and Anzali ports, with about $269.4 million. The government has planned to invest $78.9 million in upgrading the transport infrastructure. Also, $12.2 million was allocated for enhancing the aviation sector, including the development of flight levels and airports of Bandar Abbas, Zahedan, Saravan, and Khorramabad.

In 2021, the Head of Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) announced that 29 projects in mines and mining industries are ready for inauguration across the country. Iran Minerals Production and Supply Company (IMPASCO) has announced that its organization will inaugurate 23 development projects in mines and mining industries of $355 million worth in 2021.

Decline In Oil & Gas Production & Slow Recovery of Manufacturing Industry is the Major Restraints for the Construction Equipment Market

Iran's economy is relatively diversified compared to many other Middle Eastern countries, but it still relies heavily on petroleum and other liquid revenues. In 2019, Iran earned $30 billion in net oil export revenues, down from $66 billion in 2018. Export revenues fell in 2019 after U.S. sanctions were imposed on Iran's oil exports, resulting in a decrease in crude oil production and exports in Iran. The economic fallout from the COVID-19 pandemic, including lockdowns and mobility restrictions, resulted in Iran's crude oil production dipping below 2.0 million b/d in 2020. Iran's proposed licensing ban and divestment strategy are ending the support for fossil fuel production. This decision of Iran to control fossil fuel exploration could directly impact the demand for construction equipment such as excavators, cranes, tower cranes, mobile cranes, etc., in the oil and gas industry.

Iran's manufacturing industry has underperformed since 2019. The primary reason for low manufacturing productivity is the country's dependency on raw materials from neighboring countries. The outbreak of the COVID-19 pandemic has disrupted the supply chain, and the Iran manufacturing industry witnessed a decline in 2020.

In 2021, the industry's recovery was slower than in other sectors such as mining, agriculture, and construction in the country. FDI investments in manufacturing sectors are less than in neighboring countries such as Pakistan, Afghanistan, Turkey, Iraq, Azerbaijan, Armenia, and Turkmenistan. Due to the negative impact of the COVID-19 pandemic, the shortage of labor has increased in the construction sector. The low growth in the manufacturing industry is likely to impact the demand for construction equipment. The demand for cranes and forklifts is expected to get hampered due to the low productivity.

 The Market is Witnessing a Surge in Low Maintenance, flexible & Fuel-Efficient Equipment.

The increasing investment in road construction triggers the demand for low-maintenance, flexible equipment. For instance, CASE construction Equipment delivered a fleet of equipment, including road rollers, motor graders, and backhoe loaders, in 2022. The major OEMs in the country are expected to follow the recent trends in demand for construction equipment and focus on delivering fuel-efficient and low maintenance equipment such as backhoe loaders, skid loaders, and mini excavators in the Iran market. With the IoT, the performance of excavators is expected to improve and offer access to more data.

VENDOR LANDSCAPE

• Caterpillar, Volvo Construction Equipment, Komatsu, Liebherr, & Kubota accounts for 32% of the Iran Construction equipment market share.
• Chinese OEMs such as Zoomlion & SANY are gaining market share due to their diverse low-cost material handling equipment portfolio.
• Prominent vendors are Caterpillar, Komatsu, Volvo Construction Equipment, Hitachi Construction Equipment, XCMG, SANY, Liebherr, Kubota, JCB, and Hyundai Construction Equipment, Zoomlion & Kobelco.
• Other prominent vendors are Liu Gong, Yanmar, Case Construction Equipment & Terex Corporation.

REPORT COVERAGE:

Earthmoving Equipment:

• Excavator
• Backhoe Loaders
• Motor Graders
• Other Earthmoving Equipment (Other loaders, Bulldozers, Trenchers)

Road Construction Equipment

• Road Rollers
• Asphalt Pavers

Material Handling Equipment

• Crane
• Forklift & Telescopic Handlers
• Aerial Platforms (Articulated Boom Lifts, Telescopic Boom lifts, Scissor lifts)

End Users

• Construction
• Manufacturing
• Mining
• Others