San Francisco, 19 January 2024: The Report 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

The global agricultural tractor market demand is expected to reach 4,968.1 thousand units by 2030, expanding at a CAGR of 6.9% over the forecast period, according to a new study by Grand View Research Inc. Owing to urbanization and population movement to cities, labor costs have been rising at astronomically high rates. The price of farm labor is inversely correlated with the price of production. Labor pay may be affected by mechanization. Mechanization rates are rising as a result of rising labor wages and a shortage of farm labor.

Additionally, the increased government support for increasing farm mechanization for a high yield by offering subsidies is assisting the growth in demand for tractors. Furthermore, technical improvements are facilitating further farm mechanization and increasing farmer knowledge of its advantages. In order to dominate the market with quicker product introductions and improvements, many companies have begun releasing new agricultural tractors. In order to develop cutting-edge machinery and maintain a dominant market position, several significant market companies are investing in R&D.

The tractor industry is also being driven by the rise in farm training initiatives that support the widespread usage of agricultural equipment. These tractors can be utilized more versatilely and take up less room because their engines have a volume of no more than 1,500 CC. Because they are more susceptible to experimentation due to their ease of modification, manufacturers are more ready to test out novel components and technologies in this market before moving on to more powerful ones. In soft soil environments, such as river basins, low-horsepower tractors perform effectively. Horticulture is the primary usage of tractors with less than 40 HP. Due to farmers' low disposable money and high labor costs, lesser-horsepower tractors are in high demand in developing nations.

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.

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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.

Agricultural Tractor Market Report Highlights

• The surge in demand for compact tractors on small farms and technological advancements, such as integrating telematics with agricultural tractors, are expected to drive market growth over the forecast period
• The outbreak of COVID-19 hampered product demand owing to the temporary suspension of production and supply chain disruption
• 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

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.

Agricultural Tractor Market Report Scope

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.

List of Key Players in the Agricultural Tractor Market

• 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.