Tractor Market Outlook, Growth, Opportunity and Forecast 2022-2028

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A study recently conducted by the strategic consulting and market research firm, BlueWeave Consulting, revealed that the global tractor market was worth USD 67.4 billion in 2021 and is further projected to reach USD 98.0 billion by 2028, at a CAGR of 4.4% during the forecast period (2022-2028). The global tractor market is being driven by several factors, including increasing farm mechanization rates, increasing automation in agriculture industry, rising labor costs, seasonal labor shortages, and shorter tractor replacement cycles. The emergence of organic farming and growing demand for food products around the world have also supported the growth of the global tractor market. Additionally, the integration of AI into agricultural equipment and the emergence of Farming 4.0 is expected to create lucrative growth opportunities for the global tractor market during the forecast period.

Rising food demand due to growing population is driving the growth of the global tractor market

The agricultural industry is one of the largest industries in the world and is responsible for feeding the world. The industry is facing issues as food demand keeps on growing due to the surging global population. According to the United Nations, the global population is expected to grow from 7.6 billion in 2018 to over 9.6 billion in 2050 and there will be a significant increase in the demand for food. Food and Agriculture Organization (FAO) and the United Nations have estimated that the agriculture productivity will have to be increased by almost 50% to meet the food demand of the increased population by 2050.

FAO has further estimated that sub-Saharan Africa and South Asia will have to more than double their agricultural productivity by 2050 to meet the increased food demand, while the rest of the world will have to increase the agricultural productivity by more than one third. Tractors are an essential part of the agriculture industry and are used for several applications, including landscape maintenance, lawn care, clearing bushes & spreading fertilizer and pulling a variety of farm equipment for plowing and harvesting. With food demand expected to increase during the forecast period, the demand for tractors is expected to increase and drive the growth of the global tractor market.

Emergence of electric tractors is expected to present growth opportunities for the global tractor market

Farming is one of the most essential jobs on the planet and the carbon footprint of farming is one of the most important issues around the world. According to the Consultative Group on International Agricultural Research (CGIAR), the global food system, including fertilizer manufacture to food storage and packaging contributes more than one-third of global greenhouse gas (GHG) emission. According to International Energy Agency, India accounted for 7% of global greenhouse gas emissions in 2018 with agriculture and livestock contributing around 18% of total national GHG emissions.

The World Economic Forum has estimated that if only 15-20% of farms around the globe adopted precision farming by 2030, yield could increase by 10-15% with GHG emission and water use reduced by 10% and 20% respectively. Tractors that run on electricity can dramatically reduce the carbon footprint of the agriculture industry. Furthermore, electric tractors are more efficient, with almost 90% efficiency, compared to conventional diesel tractors with 45% efficiency. Moreover, electric tractors require less maintenance because there are fewer moving parts. All these factors are contributing largely towards the growing acceptance of digital farming techniques and are expected to drive the global tractor market during the forecast period.

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2 WD Segment Dominates the Global Tractor Market

Based on wheel drives, the global tractor market is segmented into 2 WD and 4WD. In 2021, 2 WD segment dominated the market and held the larger share owing to growing investment in redesigning of 2 WD tractors and low cost of investment. Additionally, 2 WD tractors cost significantly less than 4 WD tractors and are the preferred choice in developing nations, such as India and Brazil. Moreover, ease of operation, small turning cycle, and design for primary farm functions are some other factors contributing to the dominant share of the segment in the global tractor market.

Impact of COVID-19

The COVID-19-pandemic affected all the industries around the world and had a severe effect on the tractor industry as well. The manufacturing of tractors went down drastically in 2020 as companies were unable to procure raw materials, components, and other parts of tractors for assembly and manufacturing. India, one of the major countries in the global tractor market, registered an exponential increase in tractor sales owing to better monsoon, easy finance schemes, and increased MSP. The tractors sales in India increased by 35.49% YoY in December 2020, according to the Federation of Automobile Dealers Associations of India (FADA).

Though the sales of tractors plunged during the second wave of the COVID-19; however, growing vaccination and reinforcement of supply chains led to swift recovery of the market. The sales have gone down again in December 2021 owing to the emergence of the Omicron variant of the COVID-19; however, the market is expected to recover swiftly in 2022.

Global Tractor Market: Regional insights

Based on regions, the global tractor market is classified into North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa. In 2021, the Asia-Pacific region dominated the market and held the largest market share. The presence of leading tractor manufacturers, along with the availability of large area of agricultural lands, and several agriculture-based economies have supported the dominant share of the market in the global tractor market. India and China are the top five countries with the highest agricultural land. India had 60.43% of agriculture land in 2018 and China had 56.08% in 2018, as per the World Bank data. The growing investment in renewables is expected to create a growing demand for electric tractors in the region and support the growth of the tractor market in the Asia Pacific region during the forecast period.

The Leading Players in the Global Tractor Market are Deere & Company, Mahindra & Mahindra, and Sonalika International Tractors Limited. Other players operating in the market include Kubota Corp., AGCO Corporation, Escorts Limited, CNH Industrial N.V., Tractors and Farm Equipment Ltd., HMT Limited, Force Motors Limited, Massey Ferguson Limited, Fendt, SDF, CLAAS KGaA mbH, ZETOR TRACTORS a.s., Changzhou Dongfeng Agricultural Machinery Group Co. Ltd., Yanmar Co. Ltd. (Yanmar Holdings Co., Ltd.), Arbos Group, Daedong Corporation, and other prominent players.

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