The Australian construction industry has been on a gradual upward trend since the end of the pandemic which is driving strong demand for compact excavators as infrastructure projects, housing projects, home improvement and landscaping projects continue to increase.
From a general perspective, within the scope of the totality of the construction industry compact equipment continue to hold a significant market share, and this is especially true for compact excavators under 2 tons.
Market observers have cited that despite challenges which includes rising living costs, labour and material costs, the compact machine market sees growth especially in the compact excavator for hire market, electric options, and even for machines that feature telematics.
Compact Excavator Market Trajectory
From the perspective of the overall construction or rather the broader construction equipment market, the market is expanding year to year and the main drivers include infrastructure projects such as roads, rail and public amenities with the tourism industry acting as a catalyst.
Significant government funding has also been noted over the last 3 years which has led to mini excavators becoming a key segment as strong demand from residential, landscaping, and utility work continue to rise. The construction equipment rental market has grown exponentially over the last 3 years and this trend is expected to continue over the next few years.
Infrastructure investment has been without doubt a major contributor to the growth of the entire construction equipment sector as public infrastructure projects continue to be pushed forward by the government.
There has been a significant jump in projects related to transport and housing which are also primary demand generators for construction equipment and the fact that most of these projects fall under the scope of urbanization, contractors lean towards taking compact excavator for hire more frequently.
From another angle, the rapid growth of e-commerce has also been seen to be driving demand due to warehouse expansions, which naturally boosts demand for compact excavator rentals and sales.
The adoption of telematics by major manufacturers for compact machinery, especially compact excavators is based on enhancing the capability of construction equipment rental companies to better manage their fleets.
Due to the low cost of compact excavator hire, these smaller machines currently hold the largest share within the market. Within the compact category, 1.5-ton to 2-ton category are the most popular due to the versatility, efficiency and practicality that these machines offer when projects are located within tight urban spaces.
These machines (compact category) are also paving the way and leading the electric (Battery Powered) segment as demand for battery-electric machines that are quieter and more environmentally friendly increases due to tighter emission standards.
Nevertheless, the industry is not without challenges as risks of recession, and issues related to supply chain and high material costs impact construction projects at all levels negatively.
Labour shortages are also an issue that is persistent in the Australian construction sector as fewer people are willing to take on the hardships associated with construction labour which in turn drives manual labour cost further up the ladder.