Thailand Construction Equipment Market - Strategic Assessment & Forecast 2023-2029

MARKET INSIGHTS

The Thailand construction equipment market was valued at 13,997 units by 2022 and is expected to reach 20,536 units by 2029, growing at a CAGR of 5.63%. The Thai government was optimistic for 2022 and introduced several infrastructure development projects, such as the development of Eastern Economic Corridors; the construction of roads and railways in the central and southern regions for smoothening the transit, which helps to accelerate trade activities across the country. The government also aims to develop 100 smart cities by 2024.

In 2021, several renewable energy plans, such as the Energy Efficiency Plan (EEP), Alternative Energy Development Plan (AEDP), and Power Development Plan (PDP), were introduced to increase renewable energy share. Further, the government’s aim to increase its renewable energy share to 37% by 2036, supported by plans to install solar panels on rooftops, is expected to positively impact the demand for construction equipment such as cranes and aerial work platforms. The surge in government investment in public infrastructure, including railways, housing, & aviation, is expected to drive the Thailand construction equipment market during the forecast period.

KEY HIGHLIGHTS

• Earthmoving equipment accounted for the largest Thailand construction equipment market share in 2022. Excavators in the earthmoving segment accounted for the largest share in 2022. Rising investment in public infrastructure and transport facilities is expected to drive demand for excavators in the Thailand construction equipment market.
• Government investment in road construction, infrastructure development, housing projects, smart cities, and the development of Eastern and Southern Corridors of the country expect to positively impact demand for excavators compared to other earthmoving equipment in Thailand.
• The increasing demand for construction equipment can be attributed to increased investments in infrastructure, transport, and renewable energy projects. The government's focus on enhancing the share of renewable energy in Thailand expects to drive the Thailand construction equipment market in the power generation industry.
• With the presence of several global players, the need for product differentiation has led to technology upgrades such as automatic haulage systems (AHS), telematics, etc. Integrating IOT with construction equipment enables the detection of unplanned maintenance and repairs, gaining popularity in the market.
• The country is facing challenges of rising building material costs which is impacting the country’s real estate market. The prices of houses have witnessed a sharp rise in 2023. Shortage of skilled labor force is another major challenge in the Thailand construction equipment market.
• The government aims to reduce carbon emissions to achieve the goal of carbon neutrality by 2050. Several renewable energies, such as the Energy Efficiency Plan (EEP), Alternative Energy Development Plan (AEDP), and Power Development Plan (PDP), were introduced to increase renewable energy share. However, these initiatives are threatened by anti-government protests rocking the country. The demand for a new democratic constitution and the dissolution of the parliament are not yet met by the present government. In 2022, the protests hampered economic growth, resulting in a decline in manufacturing and renewable energy FDI inflows, which can have a catastrophic impact in the long run.

MARKET TRENDS & DRIVERS

Labor Shortage Triggering Demand for Mini Excavators in Thailand Construction Equipment Market
The demand for mini excavators is growing in the Thailand market. The unavailability of cheap labor and the requirement for inner-city construction projects have triggered the demand for mini excavators in Thailand. Mini excavators provide low fuel consumption, ease of transportation, use in compact inner-city projects, and have low running and maintenance costs, making them a popular choice among other excavators in the segment. The shortage is expected to grow due to low wages & dependency on the foreign labor force. Such factors prompt the use of mini excavators for inner-city projects.

Power Generation Through Waste Management Triggers Use of Excavators & Loaders
Government focuses on eliminating the use of fossil fuels for power generation & waste management. This prompt uses power generation through waste products. With rising environmental safety concerns, the Thailand government focuses on electric generation through waste. The country generates approximately 71,700 tons of solid waste per day. Furthermore, the government has planned two new waste-to-energy power plants in Bangkok. The plant expects to generate 35 megawatts of electricity using 1,000 tons of waste as fuel each day.

A Surge in Government in Various Infrastructure Projects
In 2023, there has been a rise in infrastructure development projects in Thailand, which is expected to impact the Thailand construction equipment market positively. The finance minister of Thailand expects the economy to expand by 3-4% in 2023 due to rising government investment in key infrastructure projects. According to Fiscal Policy Office data, state agencies planned to invest USD 19.7 billion in 2023, which accounts for nearly 20.9% of total spending on infrastructure. Major projects are the Highways Department’s construction of new highways & Irrigation Department’s project to develop new water source areas. Investment is also directed toward the construction of embankments along the rivers in the country.

Increasing Government Focus On Renewable Energy Projects
The Thailand government has introduced several plans, such as the Energy Efficiency Plan (EEP), the Alternative Energy Development Plan (AEDP), and the Power Development Plan (PDP), to increase renewable energy share. According to the IRENA report, Thailand's share of renewable energy is expected to reach 37% by 2036 from 12% in 2019.

The government has established a roadmap (Remap 2036) for enhancing the growth of renewable energy. Under the Remap, Solar power is expected to reach 17GW in 2036 due to the decrease in the solar panel cost in the Thailand market.

INDUSTRY RESTRAINTS

A Surge in Housing Prices Can Hamper Construction Equipment Sales
Thailand's housing market faces the major challenges of higher inflation, labor shortage, and rising prices of fuel & building materials. These factors push up new house prices, resulting in declining buyers of these houses. Furthermore, construction companies are worried about rising inflation, labor, and material cost as it will impact their profit margin in the project. Prices of several construction materials like cement & steel rose more than 50% in 2022. The surge in construction materials prices pushes up prices of housing units across the country which can hamper the construction projects of houses, restricting the Thailand construction equipment market growth.

Demand From Rental & Used Equipment Hampering the Sale of New Equipment
Rental construction equipment is in high demand in the Thailand construction equipment market. The rental industry in the country is dominated by four Japanese companies - Aktio, Kanamoto, Nishio Rent All, and Nikken. All these companies have a strong nationwide network to cater to the need of construction and agriculture industries customers. Further, in 2020, there was a positive impact on the rental construction equipment demand from the construction industry. However, the shortage of cashflows and project funding prompts the demand for rental and used equipment instead of new equipment.

VENDOR LANDSCAPE

• SANY, Kobelco, Komatsu, Caterpillar, and Hitachi Construction Machinery are leaders in the Thailand construction equipment market. These companies have a strong industry share and offer diverse sets of equipment.
• Caterpillar and Komatsu have already introduced automation remote control technology in 2019 for their mining and construction equipment.
• Manitou, Kubota, Toyota Material Handling, and Liebherr are niche players in the Thailand construction equipment market. These companies offer low product diversification and have a strong presence in Thailand's local market.
• Takeuchi & Yanmar have low product diversification; these companies are lagging in adopting new technologies used in construction equipment.
• XCMG, Zoomlion, Volvo Construction Equipment, and Liu Gong are emerging in the Thailand construction equipment market. These companies are introducing new technologically advanced products to challenge the market share of market leaders in Thailand. In 2021, Volvo Construction Equipment launched a range of electric compact excavators in Thailand to cater to increasing construction projects.