The global outbreak of Covid-19 virus has led to massive disruptions in all industries, majorly due to supply chain disruptions. The looming public health crisis has claimed over 35 lives in Vietnamas of 23rd February 2021and apart from that, it continues to pose a threat on the lives, livelihoods and businesses across the world.
Vietnam has shown the effectiveness in stopping the community transmission of COVID-19; however it has not been able to avoid the economic crisis due to the effects of lockdown. According to the estimation by the General Statistics Office of Vietnam, as of mid-April 2020, nearly 5 million people lost their jobs because of this epidemic. In the first quarter of 2020, the economic growth rate was 3.82%, the second quarter it decreased to 0.39%, the third quarter it increased again to 2.62%, bringing the growth rate of 9 months of 2020 to 2.12%. Although the growth is still positive, this is the lowest compared to the same period for during 2011-2020. Vietnam is one of the few countries with positive growth in economy.
Effect on Agricultural Machines Demand in the First Half of 2020: The imposed lockdown in the country and the social distancing norms have severely impacted the agricultural machines demand in the country. Companies that had surplus inventory as a buffer were stronger in with standing the market shock brought about by the pandemic. The companies that were completely relying on imports were impacted as during the pandemic as the supply chain was disrupted in the first and second half. Machinery manufacturers saw declines in demand for equipments during the Covid-19 pandemic as there was a fall in farmer’s income. The production capacity of various agricultural machine manufacturers was as low as due to drop in demand during Q2-20. Due to COVID-19 restrictions in the country, Import turnover of agricultural, forestry and fishery products were estimated at about USD 4.3 billion, down 6.7% compared to the same period in 2019. In addition to COVID, the impacts of climate change have shown an impact from the beginning of the year causing drought and saline intrusion in the Mekong Delta affecting the cultivation and aquaculture industries.
Effect on Machinery Demand in the First Half of 2020: Stay-at-home orders amidst the pandemic prohibited the workers to visit the manufacturing factories. This caused a decrease in the domestic production of agricultural machinery. Vietnam is highly dependent on import for the agricultural equipments and most of its demands are met from China, Japan and Korea. A disruption in supply chain effected companies which were completely relying on imports of machinery and spare parts.
Temporary & Long Term Shifts in the Business Practices: The demand for agricultural machinery is expected to remain low throughout 2020 due to reduced income and shift of farmers to other sectors in order to earn a livelihood. The demand for these machines is however expected to recover in the second half of the year due to increasing rice production and export of agricultural products. Relaxations in taxes coupled with decrease in loan interest rate for machines, the demand is expected to recover by the end of the year. The increasing number of FTA agreements signed by the government with various countries is expected to reduce the prices of these machines which are in turn expected to drive the demand for tractors, combine harvesters and transplanters. The ease in the lockdown is expected to increase the footfall for the agricultural machinery showrooms and increase average revenue per dealer in the coming future.
The industry is expected to witness steady recovery from 2021 onwards and the sales volume reaching pre-COVID levels in the next few years. In the longer run, players in the agricultural machinery industry are expected to shift towards precision agriculture features including GPS, GIS, Cabin Control for Fields, Telematics and Others which might make these machines more efficient in reducing post harvest losses in the future. Foreign players are expected to dominate the major share of consumers in the future. Strategic partnerships with local players and as well other stakeholders in the industry are expected to increase the domestic manufacturing sales volume in the future. This would be coupled with focus on increasing quality of products and continued investment in marketing and promotion to drive the sales revenue. Basis all these factors, the Vietnam Agricultural Machinery Market is expected to grow at a CAGR of 6.4% on the basis of sales revenue during the forecast period 2020-2025.
Key Segments Covered:-
By Product Type
Tractors (2W and 4W)
Combine Harvesters
Rice Transplanter
Implements
By Tractor Segment
Upto 12 Hp
Between 12-35 Hp
Above 35 Hp
By Region of Sales
Mekong Delta
Red River Delta
Northern Midlands and Mountains
North Central and Central Coast
Central Highlands
South East
By Implement Segment
Rotavator
Plough
Harrow
Fertilizer Spreaders
Others
Companies Covered:-
Kubota Vietnam
Yanmar Vietnam
VEAM (Vietnam Engine and Agricultural Machinery Corporation)
Thaco (LS Mtron)
Key Target Audience:-
Agricultural Equipment Companies
New Market Entrants- Domestic OEMs
New Market Entrants- Foreign OEMs
Agricultural Equipment Financing Companies
Government Bodies
Investors & Venture Capital Firms
Agricultural Equipment Manufacturers
Agricultural Equipment Distributors
Agricultural Equipment Associations
Time Period Captured in the Report:-
Historical Period – 2014-2020
Forecast Period – 2021-2025
For More Information on the research report, refer to below link:-
Vietnam Agricultural Machinery Market
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Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
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