Future Growth in Infrastructure Projects Crank up Demand for Off-highway Vehicles in Brazil, Finds Frost & Sullivan

The mushrooming of manufacturing facilities to boost market volumes

Jul 06, 2015, 13:24 ET from Frost & Sullivan

SAO PAULO, July 6, 2015 /PRNewswire/ -- The impressive growth of the Brazilian off-highway vehicle (OHV) market over the last six to eight years is expected to last well into 2021, despite some headwind in the near term, majorly caused by the country's economic condition and the lack of financing. Investments in infrastructure and the mega farm trend are expected to prove highly advantageous, boosting the volumes of OHVs in the agriculture equipment sector.

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New analysis from Frost & Sullivan, Strategic Analysis of the Brazilian Off-highway Vehicles Market (https://www.frost.com/ned8), finds that the Brazilian OHV market is expected to grow to over 170,000 units by 2021. The demand is expected to stabilize toward mid-2016, and soar thereafter toward 2021.

For more information on this study, please email Francesca Valente, Corporate Communications, at francesca.valente@frost.com.

The agriculture equipment sector is forecast to account for almost 60 percent of the total OHV volumes by 2021, followed by earthmoving equipment, with nearly 30 percent. In terms of equipment types, wheel tractors, backhoes and aerial platforms are anticipated to comprise more than 60 percent of the total market by 2021, cumulatively surpassing 107,000 units.

These high numbers have been made possible by the establishment of at least seven manufacturing facilities in Brazil in the last four years. The new facilities position the country as a manufacturing hub for the entire Latin American region, and allow market participants to achieve economies of scale as well as competitive pricing and positioning.

"High import taxes, the government's push to strengthen domestic knowledge, and qualification requirements for financial support are prompting the establishment of production facilities in Brazil," said Frost & Sullivan Automotive & Transportation Program Manager Yeswant Abhimanyu.

While the government's multi-pronged initiatives have fostered the growth of the OHV market in the past, the delays in infrastructure projects, investments, and concession auctions have reined in the growth rates to some extent. Furthermore, fluctuations in commodity prices, unstable economic conditions, and discontinuation of stimulus policies could also compel OEMs to re-strategize.

As one of the world's largest exporter of farm products, Brazil's agriculture sector is heavily dependent on foreign exchange as well as commodity and export pricing. A drop in commodity prices may translate to lesser spending on new equipment. This, coupled with high interest rates, can create a harsh economic environment for investors.

Participants can offset some of the market challenges by focusing on the popular segments of compact equipment and equipment rental. Compact equipment such as mini excavators and skid steers are expected to touch 7,000 units annually by 2021. Similarly, the equipment rental market will also take off due to the flexibility and simplicity of financing, operation and maintenance.

The market will gain additional impetus from the implementation of emission regulations. For instance, the PROCONVE MAR-I for construction and agriculture equipment can propel the market towards cleaner, more efficient technologies that reduce emissions. A move towards precision farming and productivity mapping will also give a leg up to telemetry solutions.

"The most successful equipment suppliers are likely to be those with expanding modular toolkits tailored to the needs of the Brazilian market," noted Abhimanyu. "They will facilitate cost optimization, quicker time-to-market, and global quality standards and technology content."

Strategic Analysis of the Brazilian Off-highway Vehicles Market is part of the Automotive & Transportation (http://www.automotive.frost.com) Growth Partnership Service program. This study focuses on construction and mining equipment (essential earthmoving, compaction, and material handling equipment) and agriculture equipment. It provides participant profiles, the competitive landscape, market metrics, and technology trends with a special focus on OHV telematics.

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Strategic Analysis of the Brazilian Off-highway Vehicles Market

Francesca Valente
Corporate Communications – Latin America
P: +54 11 4777 5300
F: +54 11 4777 5300
E: francesca.valente@frost.com



SOURCE Frost & Sullivan