Components: after six years of growth, the market slows down
A downturn in components is expected in 2024. The setback ends a prolonged growth phase that began in 2018. The new year should not see any significant reversals of trend. Builders' are excersing caution
The last six years, from 2018 to 2023, have been a period of exceptional growth for the components segment, to a degree that has sometimes gone against the trend of other sectors of agricultural mechanics. In the period considered, the value of component production has in fact increased from EUR 2.7 to 4 billion, increasing uninterruptedly year over year. Obviously the end-of-period balance can only be in surplus, but what is most surprising is the level of this increase: +48.1% over 2018, marking a difference of EUR 1.2 billion. The increase in production value has undoubtedly been influenced by factors such as inflation and the consequent revaluation of price lists – especially since 2022 when the deterioration of the international geopolitical framework and the commodity crisis caused a real wave of inflation – but, for a sector strongly oriented towards exports, its greatest impact was on the increase of global demand for tractors and agricultural machinery. Suffice it to say that last year global sales for the entire agricultural machinery sector topped even the record values reached in 2022. Compared to the previous twelve months, 2023 in fact marked, at a global level, a +2% increase for the tractor segment (for an overall value of USD 57 billion dollars) and for construction machinery and equipment (USD 74 billion), while components and spare parts recorded a more substantial increase of +5% (USD 34 billion). Less significant, however, was the potential contribution given by the gardening technology sector to the growth of the components segment in 2023. Garden machinery and equipment – in this case the most recent data refer only to the European continent – have in fact seen a significant drop in unit sales (-16%), which in Italy was also accompanied by a drop in production in value (-5%, or a total of USD 900 million).
The year 2024 is characterized by uncertainty. After a prolonged growth phase, 2024 could mark a setback for the Italian components industry, with a decline in orders and turnover. This is a scenario that should be taken with a certain amount of prudence since it is formulated on the basis of the expectations, moods and sentiment of the manufacturers, and not on in-depth statistical studies of market trends. While waiting for the official figures, which are all the more elaborate and complex considering the extraordinary breadth of the range of the components segment – which extends from control units to transmissions, universal joints and hydraulic valves, and even nozzles and hoes – manufacturers' expectations for short-term trends still represent a useful compass to at least try to get our bearings. Let's attempt to glimpse the sentiment of Italian component manufacturers.
A significant portion of the companies associated with Comacomp, the association that represents component companies within FederUnacoma, expects to see a significant decline in turnover for the current year, on the order of 20% or 30%. Only a minority of manufacturers expect business levels in 2024 to remain at the same levels as the previous year, or even to see improvement. This substantial stability is more likely due to particular cases related to specific business situations (expansion into a new market for example) rather than to real trends across other business organizations. According to the manufacturers, the decline, resulting from a significant drop in orders, may be due more to the dynamics of the OEM sector than to those of the aftermarket segment. As to the decline in orders – the Comacomp builders stress – the significant warehouse stocks at the dealer networks also weigh in heavily; this phenomenon also affects OEMs.
Another element that is suggesting to manufacturers to be cautious is that of the trend of individual national markets. Countries that in past years have performed very well in terms of sales of tractors and agricultural machinery, like Germany and Poland are now slowing down. Even India, which until last year was grinding out records, saw tractor sales drop in the first 9 months of 2024 (about 46,000 units less than in 2023). Things are no better in the United States, which between January and September recorded a “slowdown” of 15,000 units compared to the vehicles sold in the same period of 2023. Remaining in the Americas, component manufacturers report only slight increases in Brazil and Argentina.
EIMA International can offer a much needed boost to components. According to Comacomp's projections, a market recovery is not expected to occur before the second half of 2025. Caution and uncertainty are therefore the watchwords that best describe the expectations of manufacturers. In this scenario, the 46th annual EIMA International event (from 6 to 10 November) might just be a game changer for the over 800 component brands that will exhibit their most popular ranges and latest product innovations in the special area dedicated to components. This showcase, as is well known, is one of the specialist sectors that has always characterized and qualified the Bologna exhibition. Being part of an event like EIMA at such a moment as this, when the components market is going through difficult times, can contribute decisively to an uptick in business. This is true especially due to the presence of qualified operators and buyers from all over the world who flock to the Bologna exhibition center precisely to get a first-hand look at the latest innovations and technologies being offered by the exhibiting industries from five different continents.
