Agricultural Tractors Market Size, Share & Trends Analysis Report By Engine Power (Less Than 40 HP, 41 To 100 HP), By Driveline Type, By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global agricultural tractor market demand was valued at 2,942.8 thousand units in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 6.9% from 2023 to 2030. The increase in demand for compact tractors on small farms and technical developments such as the integration of telematics with agricultural tractors are expected to drive growth. Furthermore, the quick adoption of mechanization is expected to be favorable for the market's expansion during the following eight years. Additionally, it is anticipated that the market will witness growth due to the migration of farm workers to cities, which would result in a labor shortage. Due to the brief production halt and supply chain disruption caused by the COVID-19 outbreak, product demand was impeded.

However, in H1 2022, the demand for tractors bounced back significantly with double-digit growth in major economies, such as the U.S., Canada, the U.K., Germany, China, and India. Also, strong crop production in these markets, along with the need to replace aging equipment, increased product sales in H1 2022. However, a sudden increase in demand led to lower inventory levels of tractors in H2 2022, a trend expected to continue over the next few quarters of 2022. In 2022, OEMs are presumed to increase agricultural tractor prices from 4% to 22%, which is anticipated to slow down the market growth. It is attributed to low inventory levels of tractors experienced by dealers.

Also, OEMs are currently experiencing a shortage of semiconductors coupled with supply chain disruptions and market uncertainty due to the growing COVID-19 cases, which may delay production. Furthermore, a hike in steel and aluminum prices is expected to increase tractor prices, which is further anticipated to hinder market growth over the next few quarters. Favorable government policies are likely to boost market growth over the forecast period. For instance, on September 15, 2022, the U.S. Department of Agriculture (USDA) introduced a Precision Agriculture Loan (PAL) Act to allow farmers and ranchers to avail of loans to purchase precision agriculture equipment.

Similarly, the implementation of the Canadian Agricultural Loans Act (CALA) and the U.K. Agriculture Act 2020 is expected to increase product demand over the forecast period. Over the course of the projected period, such initiatives are anticipated to fuel market expansion. Agricultural tractors' technological developments are also anticipated to be favorable for the market's expansion throughout the forecast period. For instance, the growing use of electric and driverless tractors will boost farming production.

Key vendors in this space, such as Deere & Company, CLAAS KGaAmbH Escorts Ltd., SOLECTRAC, and Monarch, have commercially launched concepts for their autonomous and electric tractors. For example, in November 2022, VST Tillers Tractors Ltd. and ZETOR TRACTORS presented two best-in-class tractors at their operations in India and the Czech Republic, VST and ZETOR jointly produced these tractors in the 45 HP and 50 HP categories.

Driveline Type Insights

The 2WD segment accounted for more than 79.5% market share in terms of volume in 2022. The segment is also estimated to register the fastest CAGR over the forecast period. Low upfront costs and better maneuverability are long-term factors that are expected to drive the demand in the 2WD segment, notably in the Asia Pacific market. The 2WDs are the most preferred tractors among middle-income farmers in India. However, a rise in diesel prices has already pushed up farmers' operating costs, which is anticipated to be one of the major worries over the projection period.

India now outsources semiconductor devices and chips for the automotive industry and other industries. To address the country's scarcity of semiconductors, the government proposed a USD 10 billion package of incentives for businesses to establish manufacturing facilities in India. The policy's goal is to encourage the development and refinement of semiconductor chips, which will probably improve domestic local component production for the foreseeable future.

Engine Power Insights

The less than 40 HP segment accounted for more than 62.14% market share in terms of volume in 2022. The high growth can be attributed to the low cost, compact size, and greater convenience offered by less than 40HP tractors to perform all basic farming operations. These equipment are adopted mainly in the Asia Pacific region, where approximately 85% of farmlands are below 10 hectares and are preferred by most farmers in the region. In addition, the electrification of tractors in the less than 40 HP segment is expected to gain momentum over the next few years.

The 40 HP to 100 HP segment is expected to register a significant CAGR during the forecast period. It is credited to a surge in demand for these tractors from developed markets, such as the U.S., Japan, and Germany. Increased income levels, tech-savvy farmers, and well-established after-sales services are expected to favor the growth of this segment over the forecast period. The rising demand for high-power tractors for more than 10-hectare farm sizes is expected to be a long-term factor, which is expected to drive the segment over the forecast period.

However, farmers' operating costs have already grown due to a rise in diesel prices, which is anticipated to be one of the major worries for the forecast period. Currently, India outsources semiconductor devices and chips for the automotive industry and other industries. Therefore, to overcome the semiconductor shortage in the country, and to encourage businesses to establish production facilities in India, the government unveiled a USD 10 thousand unit package. The policy aims to promote semiconductor chip manufacturing and refining, which is likely to further boost the indigenous local production of components for the next few years.

Regional Insights

Asia Pacific led the global market with a volume share of more than 69% in 2022 and is estimated to grow at the fastest CAGR over the forecast period retaining the dominant position. The growth is driven by India, followed by China and the rest of Asia Pacific. India led the APAC regional market accounting for more than 54 % share in 2022. In India, product sales are expected to reach over 900 thousand units by 2022. Easy loan availability, favorable Minimum Support Price (MSP), and better monsoon are expected to bode well for the regional market growth in 2022.

Europe is expected to grow at a moderate CAGR in terms of volume over the next few quarters in 2023. The growth is attributed to the increased demand for large farm tractors, particularly from Italy, Greece, and Lithuania. In addition, the high demand for autonomous tractors is expected to drive regional market growth over the forecast period. On the other hand, a long waiting period for new tractor purchases due to production delays is expected to hamper the market growth over the forecast period.

Key Companies & Market Share Insights

Lack of skilled employees, high raw material prices, and shortage of semiconductor components are short-term challenges that are faced by OEMs. Moreover, due to low inventory levels, OEMs and dealers cannot meet consumer demand. However, strategic initiatives, such as collaborations and innovations, are expected to counter such bottlenecks over the next few years. For instance, in November 2022, CNH Industrial N.V. signed a long-term agreement with Monarch Tractor, an AgTech company, to develop fully electrified autonomous tractors. The initiative would enable the former company to increase its product portfolio.

Furthermore, the growing popularity of autonomous tractors prompted OEMs to adopt an inorganic growth approach to increase market presence. OEMs are emphasizing mergers & acquisitions and collaborations to strengthen their market footprint. For instance, in August 2022, Deere and Company acquired Bear Flag Robotics, an AgTech company, for USD 250 million. It would help the former company to meet consumer demands and increase its customer base. Some prominent players in the global agricultural tractor market include:

• AGCO Corp.

• CNH Industrial N.V.

• Deere & Company

• CLAAS KGaAmbH

• Escorts Ltd.

• International Tractors Ltd.

• YanmarCo., Ltd.

• KubotaCorp.

• Mahindra & Mahindra Ltd.

• Tractors and Farm Equipment Ltd.

Agricultural Tractor Market Report Scope

Global Agricultural Tractor Market Segmentation

The report forecasts volume growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global agricultural tractor market report based on engine power, driveline type, and region:

• Engine Power Outlook (Volume, Thousand Units, 2018 - 2030)

  • Less than 40 HP

  • 41 to 100 HP

  • More than 100 HP

• Driveline Type Outlook (Volume, Thousand Units, 2018 - 2030)

  • 2WD

  • 4WD

• Regional Outlook (Volume, Thousand Units, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

    • Italy

    • Spain

    • Ukraine

    • Romania

    • Poland

    • Benelux

    • Turkey

    • Rest of Europe

  • Asia Pacific

    • China

    • India

    • Japan

    • Australia

    • South Korea

    • Rest of Asia Pacific

  • Latin America

    • Brazil

    • Mexico

    • Rest of Latin America

  • Middle East & Africa