Spain Construction Equipment Market - Strategic Assessment & Forecast 2022-2028

MARKET INSIGHTS

The Spain construction equipment market is expected to grow at a CAGR of over 7% from 2022 to 2028, to cross $7 billion by 2028. The growth in construction equipment is driven by government investment in infrastructure, hydraulic infrastructure, and renewable energy projects.

Spain is one of the leading construction equipment markets in the world

Spain's economy was adversely impacted by the COVID-19 pandemic, which led to a decline in demand for construction equipment by a 4.3% contraction of GDP in 2020. However, ICEX (Spanish Institute of Foreign Trade) predicted that the GDP is projected to grow by 5.5% in 2022 and 3.8% in 2023.

Spain has a favorable business environment, ranked 30th in the ease of doing business index in 2021. The country has a good administrative setup and attractive foreign policies. The government initiatives to ease foreign investment norms in construction, transport, and renewable energy sectors attract FDI investment. The government also offers a range of tax incentives, support services, and import duty exemptions and provides a free trade zone that supports the growth of FDI inflows. Services, construction, and manufacturing were leading industries that attracted nearly ~68.2% of FDI inflows in 2020.

The infrastructure projects which are under progress such as Punta Norte Residential Complex with an investment of (USD 220 million), the Palencia-Aguilar de Campoo High-Speed Railway LinePalencia Norte-Amusco section (USD 114 million), the Cadiz Photovoltaic Solar Complex 233.6 MW (USD 134 million), Sabinar Photovoltaic Complex 252 MW (USD 213 million), Olmedilla Hive Solar Plant 169 MW (USD 94 million), Trujillo Solar Power Plant Complex 125 MW (USD 80 million), Sinova Wastewater Treatment Plant (USD 72 million) and Calatorao Solar Plant 50 MW (USD 47 million).

A surge in Investment across Transport Infrastructure, Hydraulic infrastructure & Renewable energy Projects

The Spanish government had planned to invest USD 26.2 billion in rail infrastructure projects over the next five years. As per the projected growth trends during COVID-19, the sector's contribution was 22% of Spanish GDP by 2020. In 2021, the Spain government had planned to spend about USD 82 million worth of investment on the water infrastructure in Seville. These investments are part of the 2030 plan, which is based on the transformation, modernization, and adaptation to meet the demands of society and the new challenges of climate change. The infrastructure projects in Spain, such as the Punta Norte Residential Complex with an investment of USD 220 million and the Palencia-Aguilar de Campoo High-Speed Railway LinePalencia Norte-Amusco section with an investment of USD 114 million, are expected to give a boost to the construction sector.

As of January 2022, the Ecological Transition Ministry is processing 697 renewable energy projects, including 467 solar parks, 211 wind farms, two hydroelectric proposals, and 17 hybrid plants. Together, they would produce 66,000 MW. According to the Spanish renewables company Capital Energy Solar PV in 2021, it has prepared three solar PV projects with an investment of USD 142.5 million, a total of 305 MW, to install in the Madrid region of Spain, such as 130-MW La Vega, 100-MW Albares, and 75-MW Cruz across five different municipalities in the Madrid region. The whole initiative will require over 529,000 solar panels.

According to the Ministry of the Ecological Transition and the Demographic Challenge (MITECO), in 2021, the national budget and the EU contribution are expected to invest USD 13.1 billion in green policies that will allow progress to be made in decarbonization, mitigating depopulation, and promoting the circular economy. The hydraulic infrastructures had an investment of USD 740.1 million in 2021, to which USD 102.5 million will be added and invested through public entities and state-owned companies. The total hydraulic investment is USD 842.7 million.

The rise in investments in transport infrastructure, hydraulic infrastructure & renewable energy sectors are expected to drive the demand for excavators, backhoe loaders, and fixed and tower cranes.

Renewable energy projects support the demand for mini excavators and cranes in the Spanish market.        

Shortage of building materials, banning oil and gas exploration, and slow recovery in the manufacturing sector are the major challenges

According to the National Confederation of Construction (CNC) 2021, 75.6% of the work in Spain experienced delays in the last three months, while the remaining 24.4% met the deadlines but registered a rise in costs. At that same time, the average construction price increased to 22.2%.

According to the Spanish Council of Ministers 2020, a Draft Bill on Climate Change and Energy Transition was approved, setting out the country's overarching climate policies. According to UNEP's Production Gap 2019 report, Spain had planned to produce 120% more fossil fuels than would be consistent with limiting warming to 1.5ºC. This decision of Spain 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.

The manufacturing industry in Spain declined by 1.8% and 8% in 2019 and 2020, respectively. The major reason for low manufacturing productivity is the country's dependency on raw materials required for manufacturing. The outbreak of the COVID-19 pandemic has disrupted the supply chain, which led to the decline of Spain's manufacturing industry in 2020.

Due to the high impact of the COVID-19 pandemic, there is an increasing shortage of labor in the construction sector. Labor shortages in the construction sector will result in the delay of projects and will impact the construction equipment sales and will result in decreasing demand for construction equipment in the Spanish market.

Rising Demand for Safer and Larger Capacity Tower Cranes and Telematic in Excavators

There is a good demand for the high-top EC-H cranes, which can handle high load capacities up to 50t. These powerful machines are required to lift prefabricated elements and lift heavy loads for dams, power stations, and mines. There is also an increase in the use of prefabricated elements, leading to a need for bigger lifts moving away from the very small tower cranes, and focusing more on bigger equipment.

Telematics also increases productivity, reduces costs, and arms contractors and equipment owners with the data necessary to predict and prevent downtime and maintenance. The same enabling technologies that are changing the automobile will impact the excavators and cranes market. Cameras, sensors, and machine-monitoring systems will improve the operator's ability to do the job, making a safer machine, and improve the total lifecycle costs of the excavator. IoT in construction equipment for remote monitoring is gaining popularity in developed and developing countries. With the IoT, the performance of excavators is expected to improve and offer access to more data than ever before. This will help in monitoring the performance and efficiency of excavators. Therefore, Telematics plays a vital role in the construction equipment industry

KEY HIGHLIGHTS IN THE REPORT

• The Material Handling segment is the largest in Spain construction equipment market, followed by earthmoving and road construction equipment. Forklifts and Excavators have been the fast-growing segments. The demand for excavators and forklifts is expected to rise due to various government investments in infrastructure development, growth in renewable energy, and the country's construction industries.
• Spain is the largest market for Forklift in the world; the equipment is extremely flexible, cheaper, and can be used to lift and move various materials over short distances, which makes it extremely popular in the Spain construction market.
• Various civil engineering works and residential projects prompt demand for telematics in excavators in the market. The real estate and affordable housing projects support the demand for large tower cranes in Spain.
• The infrastructure investment in 2021 will drive the construction industry's growth. The government's focus on renewable energy resources for power generation is attracting major FDI inflows in 2021.

VENDOR LANDSCAPE

• The key players in Spain construction equipment market are Caterpillar, Volvo CE, Komatsu, Liebherr, and Kubota.
• Caterpillar, Komatsu, Volvo, Kubota, and Hitachi accounted for ~33% of the market.
• Other prominent vendors are XCMG, SANY, JCB, Kobelco, Zoomlion, Hitachi Construction Equipment, and Hyundai construction equipment.

CONSTRUCTION EQUIPMENT DISTRIBUTORS INCLUDED IN THE REPORT ARE

• LVP Cranes
• Centrocar
• ITT Bobcat OF
• AURTENECHE MAQUINARIA
• SUR KOMAT MAQUINARIA
• Finanzauto