Crane market outlook: Will 2025 bring a rebound?

Cranes in Stockholm, Sweden (Image: glimpseofsweden via AdobeStock - stock.adobe.com)

Preliminary figures indicate that 2024 was a tough year for construction equipment sales, with declines of 10 – 20 per cent in many countries.

“Most markets around the world fell last year, apart from India, and some of them fell quite steeply,” says specialist forecaster Off-Highway Research’s managing director Chris Sleight.

A surge in equipment sales during the pandemic, fuelled by low interest rates and government stimulus measures, came to an end.

“There was a big bulge of sales during the pandemic, driven by low interest rates and various stimulus measures. That came to an end and at the same time, interest rates were high last year. We feel they stayed too high for too long and that has impacted housebuilding in Europe in particular,” Sleight explains.

The impact on crane equipment

The slowdown in housebuilding led to reduced sales of construction equipment, particularly compact machines. The nature of the market means that smaller equipment types, which are sold in greater numbers, skew the overall decline.

“Because we tend to look at the market in unit terms, when the small equipment types are affected, it does look like quite a sharp downturn,” Sleight says. “Smaller machines are sold in greater numbers so there is a pyramid effect.”

Interest rates influence on equipment sales

Despite the downturn, better conditions are on the horizon as central banks gradually lower interest rates. In December 2024, the European Central Bank cut its key interest rate by 0.25 percentage points to 3 % and has indicated that more cuts may follow to support sluggish economic growth.

Similarly, the US Federal Reserve reduced rates by a quarter point in December and is expected to cut rates by another half a percentage point in 2025, bringing the federal-funds rate to around 3.75 % - 4 % by the year’s end.

China’s central bank has also signalled plans to cut interest rates at the “proper time,” with reports suggesting they could drop from the current level of 1.5 %. Meanwhile, the Bank of England has remained cautious, holding rates at 4.75 % in December, with uncertainty about potential cuts in 2025.

“As 2025 progresses, you would expect interest rates to continue coming down, which should get housebuilding going again. Another important thing about interest rates is that most equipment purchases are financed rather than bought using cash flow. So, to some extent the interest rate dictates how much it costs to buy a machine,” says Sleight.

* - Forecast ** - Rest of the World includes South America up to & including 2020. South America stated separately from 2021 (Chart courtesy of Off-Highway Research)

Fleet owners are delaying purchases in anticipation of further rate cuts.

“That’s not to say that rates at their current level are unaffordable. Rather, because there is an expectation for more cuts to come, fleet owners are prepared to let machines age a little further before they dip back into the market for new machines.”

A market rebound in 2025?

While 2024 saw a steep drop in sales, global equipment volumes remained high.

“It is by no means a disaster. It’s not like we’re back in 2009 kind of territory. Anything that’s down 10 % is bad news but objectively the market is still fairly strong.”

Sleight anticipates a global upturn by mid-2025. “We would expect a general global upturn certainly by the second half of the year,” he says. “What often happens is it goes from sleepy to high demand very quickly. People are caught napping - the customers want it yesterday, and as a result lead times start to stretch out.”

The market follows a cyclical growth trend of about 3 % per year. If housebuilding recovers in struggling mature markets, strong demand is expected for compact machines in 2025. In Europe, mini excavators, telehandlers, and small crawler and wheeled excavators are likely to be in demand, while in North America, telehandlers, compact tracked loaders, and compact excavators should see growth.

Emerging markets and larger equipment demand

For infrastructure-driven emerging markets, larger machines are expected to dominate demand, particularly in mining economies where commodity prices remain strong.

“So long as commodity prices hold up, so will the demand for larger machines like excavators, wheel loaders and dump trucks,” says Sleight.

Chinese OEMs target export markets

China’s construction equipment manufacturers are focusing on exports after a domestic boom in 2020 and 2021 was followed by a collapse in the country’s real estate market. “It has been a matter of survival to some extent. But those big manufacturers have always had ambitions to be global powers,” says Sleight.

Chinese OEMs have expanded aggressively into emerging markets, particularly in Southeast Asia, where they have become leading suppliers. “The types of products that they’re doing very well with are the ones that are made in the highest volumes in China. It tends to be crawler excavators, mobile cranes (which are not really a high-volume product, but there are a lot of them made in China), wheel loaders, and wide-body trucks that are replacing traditional dump trucks of up to about a hundred tons.”

However, gaining traction in Europe and North America remains a challenge. “More difficult for Chinese OEMs are regions like Europe and North America, where customers don’t necessarily buy on lowest price and the incumbent OEMs have large and well-established distribution networks,” Sleight adds.

Outlook for 2025

Despite a challenging 2024, the construction equipment market has strong fundamentals. Housing shortages in Europe and North America and ongoing infrastructure needs suggest a positive outlook for the crane industry.

“The fundamentals for construction equipment are good. There are housing shortages throughout Europe and North America and there’s a need for infrastructure. Everything is in place - it just needs that impetus for the uptick to begin.”