DUBLIN–(BUSINESS WIRE)–The report “South Korea Construction Equipment Market – Strategic Assessment and Forecast 2022-2028” has been added to from ResearchAndMarkets.com offer.
The construction equipment market in South Korea is expected to grow over the forecast period owing to the reform of the South Korean net-zero electricity market and factors such as the growth of the e-commerce industry and the government efforts to promote public and private investment in the country. .
Demand for construction equipment in South Korea is expected to increase due to planned investments in the construction and manufacturing sectors and ongoing infrastructure projects.
South Korea’s net-zero electricity market reform will boost demand for construction equipment.
South Korea’s 9th Basic Plan for Electricity Supply and Demand plans to expand the share of renewable energy in installed capacity to 40% by 2034, from 15.1% in 2020. According to the plan, all coal-fired power plants with 30-year operating life cycles will be shut down by 2034.
From 2020 to 2034, the plan includes 15-year electricity supply and demand forecasts and electrical installation plans. Evaluation of the previous program; Forecasting long-term supply and demand; Demand management objective; Plan of power generation and transmission facilities/substation; Extension of distributed power supply; Greenhouse gases and an acceptable dust reduction plan are among the main objectives of the project.
During the forecast period, there will be a huge demand for construction equipment to build the infrastructure needed for the reform of the South Korean power system. Infrastructure, such as power plants and greenhouses, will drive demand for material handling and the overall construction equipment industry in South Korea.
The demand for forklifts and telehandlers will increase as the e-commerce sector grows
South Korea has many internet users (96.5% of the population in 2020) and grew by 1.1% in 2021, thanks to the deployment of modern technologies (such as the 5G network), which fueled the growth of the sector of the country’s e-commerce.
Some e-commerce companies are also expanding their operations in the country. For example, Una Brands has partnered with KlickBrands to gain access to South Korea’s e-commerce industry. In addition, South Korean companies are expanding their logistics centers, such as Hines, which announced the development of Iljuk Logistics Center to expand its logistics capacity. CJ Logistics announced that the construction of distribution centers worth $621 million will increase the demand for forklifts.
As a result, the expansion of the e-commerce sector in South Korea is benefiting the forklift market in the region. Booming trade in seaports in the region is also supporting demand for forklifts and telehandlers (South Korea has an export-dependent economy with about 52% of all business exports). Forklifts and telehandlers are used for loading and unloading and material handling in seaports. The need for forklifts has increased due to the increased flow of cargo through ports.
Government efforts to promote investment fuel construction equipment growth
To promote public investment, the government is focusing on improving transport and logistics systems and constructing smart buildings, zero energy buildings, smart cities, etc. The government has announced a $20 billion budget for 2021.
In addition, the government also encourages private investment, for which the government announced a budget of $31.2 billion for 2021. These efforts to encourage investment mainly reduce the unemployment rate, as unemployment is one significant challenges facing South Korea post-COVID. -19 pandemic. To overcome the same problem, the government has invested around $17 billion (which includes support programs for start-ups, programs for middle-aged workers, etc.) in 2021 to create 360,000 jobs.
To reduce unemployment, the government is also focusing on strengthening key manufacturing industries (such as machinery and equipment, mobile phones, automobiles, machinery including computers, home electronics, machine tools, etc.) and services by building digital clusters and modernizing smart factories, among others. This will boost the demand for construction equipment across all major industries (construction, manufacturing, mining, etc.) in South Korea.
High Labor Costs and Rising Construction Material Prices Are Squeezing OEM Profit Margins
Due to the high level of labor rights in South Korea, the construction industry finds it difficult to hire experienced workers. Workers in South Korea can use technologically advanced machinery.
On the other hand, construction companies have to pay high wages to workers to complete the job on time and efficiently. Also, building materials are expensive in South Korea. The prices of raw materials such as iron ore, steel, copper, etc., have risen sharply since the outbreak of COVID-19. For example, in January 2022, the average scrap metal price increased by around 113% (almost double) compared to the 2020 price.
By 2021, average profit margins for companies in the construction industry had shrunk by around 40% compared to 2020 due to these additional costs. Therefore, most construction companies prefer to lease equipment rather than buying new equipment. These trends are having a negative influence on sales of construction equipment.
Unsold homes and a declining population are expected to negatively affect demand.
In 2020, there were more deaths than births (275,800 babies were born and 307,764 people died) in South Korea. Moreover, 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, the total population of South Korea has also decreased by 57,300 compared to 2020.
These factors and high prices have resulted in around 17,000 unsold homes in South Korea for 2021.
With the declining population and increasing unsold homes, construction of new homes is expected to be negatively affected, restraining the demand for construction equipment in South Korea during the forecast period.
Due to the labor shortage, construction equipment with automation and intelligent operation technology is in high demand.
Following the COVID-19 outbreak, South Korea is experiencing severe labor shortages in the construction, manufacturing and mining sectors. Due to a labor crisis, new technologies in construction equipment are in high demand to improve worker efficiency and reduce reliance on labor.
Hitachi, for example, introduced wheel loaders and excavators with automation, intelligent operating technology and the Concise Hitachi Comprehensive Machine Management assistance system. Other major construction equipment manufacturers, such as Hyundai and Volvo, are following similar patterns and introducing new technologies such as 5G, AI, advanced analytics (IoT), etc., in their equipment to address labor shortages in the construction and mining industries, respectively.
KEY OVERVIEWS OF 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. Forklift was the largest segment by type. Investments in the logistics industry, such as expansion of distribution centers, opening of new logistics centers, etc., have 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 expected to continue dominating the market during the forecast period.
The growing demand for construction equipment is attributed to investments made by favorable government policies. Foreign multinationals are investing in South Korea, upcoming industrial developments in construction industries and government initiatives.
By shifting to intelligent systems driven by IoT and data analytics 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 as the leader, followed by Hyundai Doosan Infracore, Komatsu Group, Caterpillar, Hitachi CM and Volvo Construction Equipment. By 2021, these companies will hold nearly 60% of the total South Korean construction equipment market.
Yanmar has served customers in the South Korea region for more than 70 years. However, it lags behind Liebherr in innovations, despite Liebherr having less than 25 years of experience. In 2022, Liebherr introduced hydrotreated vegetable oils (HVO) as an alternative fuel for construction machinery.
In March 2022, Hyundai Construction Equipment introduced its new excavator model, HX320A, with fuel-efficient and environmentally friendly engines.
Hyundai construction equipment
Volvo construction equipment
Other Important Suppliers
Kobelco construction machinery
For more information about this report visit https://www.researchandmarkets.com/r/7g34a4