The Japan tractor market witnessed registrations of 32,013 units in 2022 and is expected to reach 38,837 units by 2028, growing at a CAGR of 3.27% during the forecast period. With a long history and extensive experience manufacturing top-notch agricultural machinery, Japan is home to many well-known tractor manufacturers. Japan is known for its technological innovations and high-quality production. This knowledge is reflected in the market for agricultural tractors, where manufacturers continually spend money on R&D to produce advanced features and technology. Modern Japanese tractors frequently incorporate telematics, GPS guiding systems, automated controls, and precision farming technologies.
- The Hokkaido region witnessed a massive increase in farm mechanization in terms of agricultural and industrial productivity.
- The Japan tractor market is highly concentrated, with the top players controlling most of the industry. Domestic and global brands, on the other hand, are equally represented in the market.
- Japan's government plans schemes and initiatives to facilitate credit and improve agriculture-related operations, which will contribute to the growth of the overall value chain of the industry.
- The Japanese tractor market decreased by -7.79% in 2022 from 2021. The increased tractor cost, the small size of Japanese farms, increasing labor costs, and unfavorable climate conditions affected the market.
MARKET TRENDS & DRIVERS
Increasing Demand for Compact Tractors
The demand for compact tractors in the Japan tractor market is expected to increase in the coming years. The quantity of land that may be used for agriculture in Japan is constrained, and the farm size is small compared to other countries. Compact tractors are important for effective and profitable farming in Japan since they are ideal for small-scale operations and can navigate easily in confined locations. Japan’s farming population is aging, and many younger people choose careers outside of farming. A need for less physically demanding agricultural equipment is present as more experienced farmers retire. Compact tractors meet the needs of an aging farming population with their user-friendly design and ergonomic features.
Increasing Demand for Specialty Crops
Crops that are unique, high quality, and frequently have particular characteristics or flavors are called specialty crops, like fruits, vegetables, nuts, flowers, etc. These crops serve specialized markets and are frequently linked to positive health effects, unique culinary experiences, or cultural importance. Japanese customers are becoming more health-conscious and looking for various wholesome food options. Specialty crops are considered healthier alternatives to mass-produced crops, such as heirloom vegetables, organic foods, and exotic fruits. Consumers are ready to pay a premium for them because of the perceived greater flavor, health benefits, and quality of these specialized crops. Japan's rising demand for specialty crops presents chances for farmers specializing in these crops to set themselves apart from the competition and command higher prices.
INSIGHTS BY HORSEPOWER
The 20 HP- 30 HP segment recorded a high market share in the Japan tractor market in 2022. The major factor for the steady growth of the medium-power range of tractors is the increased business turnover among hobby and livestock farmers. Compact tractors, or tractors with 20HP-30HP, are important in the agricultural sector, particularly for small-scale farming and specialized uses. Compact tractors are preferred in the region because of their maneuverability, flexibility in crossing small fields, and constrained locations where agricultural land is frequently limited. These tractors are frequently used for light-duty tasks like planting, tilling, and mowing. Iseki & Co., Ltd., Mitsubishi Mahindra Agricultural Machinery, Yanmar Co., Ltd., and Kubota Corporation are well-known tractor producers in the region making compact tractors.
INSIGHTS BY DRIVE TYPE
The Japan tractor market is dominated by mid-range HP 2WD tractors. 2WD tractors are the most preferred tractors by farmers in the country. The low relative cost of ownership and numerous features and haulage power make 2WD tractors more popular among farmers. Industry players redesign their 2WD tractors with more power and features so farmers can upgrade them as required. The features are fuel efficiency and added comfort for operations in confined spaces. Thus, manufacturers customize their products according to the industry and end-user requirements.
The demand for agriculture tractors in the Hokkaido and Honshu regions was high in 2022. Strong demand for agriculture tractors is expected to come from the Hokkaido region, with a CAGR of over 3% during the forecast period. Similar to the diversity of the overall volume of tractors in Japanese agriculture, the tractor industry is regionally diverse. The size of the farms in the Hokkaido and Honshu (regions) necessitates using stronger, more expensive tractors. The Honshu region held the largest Japan tractor market in 2022. The factors contributing to the size and growth of the tractor industry in Honshu are the size and productivity of the agricultural sector. Agricultural practices, population and food demand, government support, infrastructure development, technological advancement, climate and natural resources, and export opportunities contribute to the growth of the agriculture sector in the region.
The competitive environment in the Japan tractor market is very strong, with multiple established manufacturers competing for industry share and seeking to meet the different expectations of farmers. John Deere, CNH Industrial, AGCO, and Kubota dominated the tractor industry. These brands have adopted several strategies to gain traction in the industry.
Manufacturers of tractors compete by introducing advanced features and technologies. This includes automated controls, networking options, and environmentally friendly architecture improvements. Manufacturers can attract customers and stay competitive by continuously innovating. Major Japan tractor market players are announcing alliances, new product launches, and expansions to acquire a competitive edge. For instance, in October 2022, The Global Institute of Technology, established by the Kubota Corporation in Osaka, Japan, intends to boost research and development to create new products per the area's market conditions and requirements.