Market Trends of Germany Agricultural Tractor Industry
This section covers the major market trends shaping the Germany Agricultural Tractor Market according to our research experts:
Increasing Agricultural Labour Cost
- Germany is Europe's largest tractor market. The two biggest agricultural tractor markets in Europe - Germany and France, account for almost four agricultural tractors out of 10 registered in Europe. Agriculture tractors accounted for 93% of the overall German tractors market in 2021.
- With approximately 80% share, tractors are Germany's largest segment of agriculture equipment in terms of revenue. In addition, in terms of unit sales, Germany is the largest exporter of tractors across Europe. The number of tractors manufactured in Germany accounts for over two-thirds of the total number of tractors manufactured in Europe.
- The German economy achieved excellent growth in 2021. The growth rate is expected to sustain in 2023, supported by the rising employment rate and a monetary policy stance that will continue to support domestic demand. Consequently, 2022 is expected to witness a healthy increment of 4.5% in real GDP growth.
- The Government of Germany's schemes and initiatives to facilitate credit and improve agriculture-related operations are the major drivers contributing to the growth of the overall value chain in the German agricultural sector.
- Germany spent USD 1.4 billion of its official development assistance (ODA) on agriculture in 2021, making it the prime Organization for Economic Cooperation and Development (OECD) and Development Assistance Committee (DAC) donor to agriculture in real terms.
- Agriculture was one of the strategic priorities of the former Development Minister of Germany, Gerd Muller, who launched 'ONE WORLD - No Hunger,' a special initiative on food and nutrition security as well as rural development in 2014, which will most likely be carried forward in this legislative period (2021-2025) under the new Development Minister Svenja Schulze.
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Germany is the largest market in Europe
- Germany is the largest market for agricultural tractors in Europe. The country generates more than 27% of agricultural machinery and equipment components manufactured in Europe. Farmers are increasingly adopting agricultural mechanization as a substitute for manual labor with a more cost-effective, easily available, and more efficient means of agricultural operations.
- As a result, they are shifting toward autonomous tractors to save time and resources, which in turn, is increasing farm productivity and per-acre yield of crops. Thus, Germany has evolved to be one of the leaders in producing agricultural machinery in Europe, which signifies its dominance in the agricultural tractors market.
- In terms of sales, the emphasis is on tractor production at a share of around 40%, with a further focus on the power segment above 120 HP. Due to the booming domestic market, the export ratio in the last few years has been steady at 70-75%.
- Owing to the demand from farmers, there has been an increase in investments in autonomous tractors in the country. For instance, in 2020, Germany-based Amathaon Capital invested in autonomous tractor startup AgXeed to develop and commercialize autonomous agricultural machinery in the country.
