Global Agricultural Tractors Market 2024-2031

Global Agricultural Tractors Market 2024-2031

Agricultural Tractors Market Size, Share & Trends Analysis Report by Engine Power (Less than 40 HP, 41 to 100 HP, and More than 100 HP), by Driveline (2WD, and 4WD), and by Propulsion (Electric, and ICE) Forecast Period (2024-2031)

Agricultural tractors market is anticipated to grow at a CAGR of 5.6% during the forecast period (2024-2031). The agricultural tractor is described as a farm vehicle that provides the power and traction to mechanize agricultural tasks, especially (and originally) tillage, and now many more. The growing cost of labor and increasing mechanization of farming activities are driving the growth of the global agricultural tractors market.

Market Dynamics

Government Policies and Subsidies

Favorable government policies to encourage the adoption of mechanized solutions are a key factor driving the global market growth. Initiatives such as the US Precision Agriculture Loan (PAL) Act and the Canadian Agricultural Loans Act (CALA) support farmers in purchasing precision agriculture equipment. China, Turkey, Brazil, Japan, Germany, France, and India provide direct subsidies to small farmers for purchasing farm equipment, including tractors. In Vietnam and Thailand, farmers receive subsidized loans to buy equipment. The rental market for tractors is common across many countries. Initiatives include financial incentives, tax credits, and subsidies to make electric tractors more accessible.

Market segmentation

Based on engine power, the market is segmented into Less than 40 HP, 41 to 100 HP, and More than 100 HP.

Based on the driveline, the market is segmented into 2WD and 4WD.

Based on the propulsion, the market is segmented into electric, and ICE.

Less than 40 HP Segment Leads Agricultural Tractor Market

The less than 40 HP segment in agricultural tractors is quite significant, especially for small-scale farming operations. They are suitable for a variety of tasks, including basic farming operations and horticulture. The popularity of these tractors can be attributed to their low cost, compact size, and the convenience they offer to farmers. They are particularly in demand in developing countries, where they meet the needs of farmers who may have limited disposable income and face high labor costs.

Electric Segment to Exhibit Considerable Growth

This growth is spurred by increasing innovations and advancements in Electric Vehicle (EV) technology, such as more efficient electric motors, high-capacity batteries, and advanced power management systems. Government subsidies and incentives are also playing a crucial role in the advancement of this technology. However, challenges such as high initial costs, maintenance expenses, and limited range concerns still pose barriers to the widespread adoption of electric tractors.

Regional Outlook

The global agricultural tractors market is further segmented based on geography including North America (the US, and Canada), Europe (UK, Italy, Spain, Germany, France, and the Rest of Europe), Asia-Pacific (India, China, Japan, South Korea, and Rest of Asia-Pacific), and the Rest of the World (the Middle East & Africa, and Latin America).

Asia-Pacific holds largest market share

The regional market is driven by the high adoption of agricultural tractors across India, China, and South Korea. India is an agriculture-dependent economy. According to the Indian Brand Equity Foundation, in 2023, 58.0% of the total population in India are farmers. This indicates a high demand for agricultural tractors across the region. To increase the mechanization level, the Indian government is promoting 'Balanced Farm Mechanization' by providing subsidies on various equipment and supporting bulk buying through front-end agencies, which is expected to strengthen the tractors market in India. For instance, the Indian government offers various schemes for agricultural equipment, such as loan-cum-subsidy for the purchase of tractors. In addition, as per NABARD norms, any farmer with eight acres of land can take a tractor loan for nine years with a 12.5% rate of interest. Thus, the implementation of such government programs across the region is likely to promote the growth of the regional market.

Major Player Outlook

The major companies serving in the global agricultural tractors market include AGCO Corp., CNH Industrial N.V., Deere & Company, Kubota Corp., and Claas KGaA mbH among others. The market players are increasingly focusing on business expansion and product development by applying strategies such as collaborations, mergers, and acquisitions to stay competitive. For instance, in July 2023, CLAAS introduced its agricultural tractor series in North America.