South Korea Construction Equipment Market Report 2022: Strategic Assessments and Forecasts to 2028 – ResearchAndMarkets.com
DUBLIN–(BUSINESS WIRE)–The “South Korea Construction Equipment Market – Strategic Assessment and Forecast 2022-2028” report has been added to ResearchAndMarkets.com’s offering.
The market for construction equipment in South Korea is expected to grow during the forecast period due to South Korea’s electricity market reforming to net-zero and factors such as growth in the e-commerce sector and government efforts to promote public and private investments in the country.
Construction equipment demand in South Korea is expected to increase owing to planned investments in the construction and manufacturing sectors and ongoing infrastructure projects.
Reforming South Korea’s electricity market to net-zero will spur the demand for construction equipment.
The 9th Basic Plan for power supply and demand in South Korea plans to expand renewable energy’s proportion of installed capacity to 40% by 2034, up from 15.1% in 2020. According to the plan, all coal-based power facilities with 30-year operational life cycles will be shut down by 2034.
From 2020 through 2034, the plan includes 15-year electricity supply and demand predictions and electricity facility plans. Evaluation of the previous program; Long-term supply and demand prediction; Demand management target; Power generation and transmission/substation facility plan; Expansion of distributed power supply; Greenhouse gas and acceptable dust reduction plan are among the primary objects of the project.
Over the forecast period, there will be considerable demand for construction equipment to build the infrastructure needed to reform the South Korean power system. Infrastructure, such as power plants and greenhouses, will drive demand for material handling and the total construction equipment industry in South Korea.
Demand for forklifts and telescopic handlers will increase as the e-commerce sector grows
South Korea has many internet users (96.5% of the population in 2020) and increased by 1.1% in 2021, owing to the deployment of modern technology (such as the 5G Network), which has fuelled the country’s e-commerce sector growth.
Some e-commerce firms are also expanding their business in the country. For instance, Una Brands has partnered with KlickBrands to access the South Korean e-commerce sector. Furthermore, companies in South Korea are expanding their logistics centers, such as Hines, which announced the development of Iljuk Logistics Centre to expand its logistical capacity. CJ Logistics announced that the construction of fulfillment centers worth $621 million would increase demand for forklifts.
As a result, the expansion of South Korea’s e-commerce sector is benefitting the region’s forklift market. The surge in trade at the region’s seaports also supports the demand for forklifts and telescopic handles (South Korea has an export-dependent economy with ~52% exports of overall business). Forklifts and telescopic handlers are used for loading and unloading and material handling at seaports. The need for forklifts has increased due to increased freight flow at ports.
Government’s efforts to promote investment fuels growth in construction equipment
To promote public investment, the government focuses on improving transportation and logistics systems and building intelligent buildings, zero energy buildings, smart cities, etc. The government has announced a $20 billion budget for 2021.
Additionally, the government is also promoting private investment, for which the government has announced a $31.2 billion worth of budget for 2021. These efforts to encourage investments mainly reduce the unemployment rate, as unemployment is one of the significant challenges South Korea faces after the COVID-19 pandemic. To overcome the same, the government invested ~$17 billion (which includes start-up support programs, programs for middle-aged workers, etc.) in 2021 to create 360,000 jobs.
To reduce unemployment, the government also focuses on strengthening major manufacturing industries (such as machinery and equipment, mobile phones, automobiles, machinery including computers, household electronics, machine tools, and so on) and services by constructing digital clusters and upgrading intelligent factories, among other things. This will enhance the demand for construction equipment in all the major industries (Construction, Manufacturing, Mining, etc.) in South Korea.
High labor costs and increases in construction material prices reduce profit margins for OEMs
Due to the high standard of labor rights in South Korea, the construction industry is having difficulty hiring experienced workers. Workers in South Korea can operate technologically advanced machinery.
On the other hand, construction companies must pay high wages to workers to accomplish the work on time and efficiently. Furthermore, construction materials are expensive in South Korea. Prices of raw materials such as iron ore, steel, copper, etc., have risen sharply since the COVID-19 outbreak. For instance, in January 2022 average price of scrap iron increased ~113% (almost double) compared to the price in 2020.
In 2021, the average profit margins of construction industry companies had shrunk by ~40% compared to 2020 due to these added costs. As a result, most construction companies prefer to rent equipment rather than buy new equipment. Such trends are having a negative influence on construction equipment sales.
Unsold housing units and a population decline are expected to affect the demand adversely.
In 2020, there were more deaths than births (275,800 babies were born and 307,764 people died) in South Korea. Additionally, according to CIA World Factbook, South Korea is one of the top three countries in the world with the lowest birth rate (6.89) in 2021. In 2021, South Korea’s total population also declined by 57,300 from 2020.
These factors and high prices resulted in ~17,000 unsold housing units in South Korea for 2021.
With the declining population and rising unsold housing units, the construction of new housing units is expected to be adversely affected, restricting the demand for construction equipment in South Korea over the forecast period.
Due to labor shortage, construction equipment with automation and intelligent operation technology is highly demanded.
Following the COVID-19 epidemic, South Korea is experiencing severe labor shortages in the construction, manufacturing, and mining industries. Due to a labor crisis, new technologies in construction equipment are in high demand to improve worker efficiency and reduce labor dependency.
Hitachi, for instance, has introduced wheel loaders and excavators with automation, intelligent operating technology, and the Concise Hitachi Comprehensive Machine Management support system. Other major construction equipment manufacturers, such as Hyundai and Volvo, follow similar patterns and introduce new technologies such as 5G, AI, advanced analytics (IoT), etc., into their equipment to address labor shortages in construction and mining industries, respectively.
KEY INSIGHTS INTO THE SOUTH KOREAN CONSTRUCTION EQUIPMENT MARKET
- In 2021, the material handling equipment segment was the largest in the South Korean construction equipment market, followed by earthmoving and road construction equipment. The forklift was the largest segment by type. The investment in the logistics industry, such as the expansion of fulfillment centers, the opening of new logistics centers, etc., has boosted the demand for forklifts in South Korea.
- In terms of end-users, the construction industry is expected to generate the highest demand for construction equipment and is anticipated to dominate the market during the forecast period further.
- The increasing demand for construction equipment is attributed to investments by favorable government policies. Foreign multinationals invest in South Korea, upcoming industrial developments in the construction industries, and government initiatives.
- By switching to intelligent systems driven by IoT and data analysis for service, networking, and sustainability, the construction equipment market is transitioning to a more innovative industry.
- The construction equipment market is captured by Hyundai CE being the leader, followed by Hyundai Doosan Infracore, Komatsu Group, Caterpillar, Hitachi CM, and Volvo Construction Equipment. In 2021, these companies will have nearly ~60% share of the total South Korean construction equipment market.
- Yanmar has served the customers of the South Korea region for more than 70 years. However, it lags behind Liebherr in innovations, though Liebherr has less than 25 years of experience. In 2022, Liebherr introduced Hydrotreated Vegetable Oils (HVO) as an alternative fuel for construction machines.
- In March 2022, Hyundai Construction Equipment introduced its new excavator model, HX320A, with high fuel efficiency and eco-friendly engines.
- Hyundai Construction Equipment
- Volvo Construction Equipment
- John Deere
Other Prominent Vendors
- Kobelco Construction Machinery
- SOOSAN CSM
- HAEIN Corporation
- Daijeon Machinery
For more information about this report visit https://www.researchandmarkets.com/r/7g34a4
The content is by Business Wire. Headlines of Today Media is not responsible for the content provided or any links related to this content. Headlines of Today Media is not responsible for the correctness, topicality or the quality of the content.