LONDON--(EON: Enhanced Online News)--Technavio market research analysts forecast the global tractor rental market to grow at a CAGR of more than 8% during the forecast period, according to their latest report.
“In APAC, India will experience the highest growth rate for the tractor rental market, growing a CAGR of close to 21%, whereas China will grow at a CAGR of more than 10%”
The market study covers the present scenario and growth prospects of the global tractor rental market for 2016-2020. The report also lists low-powered engine and high-powered engine as the two major segments based on engine power, with the high-powered engines accounting for over 51% of the market share, in 2015.
“In APAC, India will experience the highest growth rate for the tractor rental market, growing a CAGR of close to 21%, whereas China will grow at a CAGR of more than 10%,” says Praveen Kumar, a lead analyst at Technavio for automotive services research.
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Technavio automotive analysts highlight the following three market drivers that are contributing to the growth of the global tractor rental market:
- High labor wage
- Growing participation of private players and government initiatives
- Increase in number of households participating in tractor rental market
High labor wage
The labor wage in regions such as the Americas and Europe is already high, whereas APAC countries such as India and China are experiencing a rise in the minimum wage of laborers. Thus, farmers are relying on rented tractors and other farm equipment to compensate for the low employment of labor in their fields.
In the Americas, New York has been the second state that has approved a new law, which would increase the minimum wage of the laborers in the city to USD 15 per hour by the end of 2018. In APAC, countries such as India are experiencing a continuous increase in the wage of agricultural workers as well as non-agricultural workers. The Indian Government has passed legislations to revise the minimum wages for the unskilled non-agricultural laborers upward by 42%. Thus, the increase in the wage of laborers is acting as a strong growth driver for the growth of this market.
Growing participation of private players and government initiatives
There is a growing focus on the agricultural sector, and most of the economies across the world are putting up their best effort to improve the productivity of their farms. Therefore, government initiatives and spending on agricultural is on the rise throughout all the major economies of the world. Even private players are investing heavily in the agricultural sector. India observed foreign direct investment (FDI) of USD 2.26 billion from April 2000 to December 2015.
Increase in number of households participating in tractor rental market
The government is creating awareness among consumers through various initiatives to increase the productivity of the farms. In the agricultural sector, purchasing farm equipment and machinery and tractors cost heavily to the farmers, and it is difficult for small farmers to purchase farm equipment. Thus, renting out tractors and farm equipment is becoming popular, and more farmers are willing to rent equipment.
In APAC, 206.7 million households depend on agriculture, but the number of households participating in the tractor rental market is low. However, it is expected that this number of will increase significantly and the revenue from the tractor rental market will exceed USD 10 billion by 2020.
“Similar upwards trends towards adoption of tractor rentals are expected in the Americas and Europe,” says Praveen.
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