Demand for construction machinery in Japan’s domestic market has declined for two consecutive years.

Demand for construction machinery in Japan’s domestic market has declined for two consecutive years.

 

Demand for construction machinery in Japan’s domestic market has declined for two consecutive years, reflecting the ongoing challenges facing the country’s construction sector amid demographic shifts, slowing infrastructure investment, and economic uncertainty. This downward trend in domestic sales has overshadowed the recovery in exports, highlighting a growing reliance on international markets to sustain the growth of Japan’s construction machinery industry.

According to the 2025 construction machinery shipment value statistics released by the Japan Construction Machinery Manufacturers Association (JCMM):

  • Total shipments fell 1.3% year-on-year to 3.4124 trillion yen, marking a second consecutive year of decline.
  • Exports rose 0.6% year-on-year to 2.3794 trillion yen, returning to growth after two years of stagnation.
  • Domestic sales dropped 5.3% year-on-year to 1.0330 trillion yen, falling for two straight years and dragging down overall performance.

This modest drop in total shipments masks a stark contrast between the performance of exports and domestic sales, two key segments that drive the industry’s overall outlook. The rebound in exports is a positive sign for Japan’s major construction machinery manufacturers, such as Komatsu and Hitachi Construction Machinery, which have been expanding their global footprint to offset weak domestic demand. The recovery was not evenly distributed across all regions, but it signals a gradual improvement in the global market for construction equipment.

JCMM noted:

“The domestic market improved in the second half, but the slowdown in the first half had a significant impact. Exports were driven by strong performance in the European market.”


This indicates that while there was a late-year recovery in domestic sales, it was not enough to reverse the full-year decline.


Export Performance by Region


By region, export performance varied widely, reflecting divergent economic conditions and infrastructure needs worldwide.

Regions in decline:

  • North America: Plunged 8.3% year-on-year to 817.6 billion yen
  • Middle East: Decreased 3.3% year-on-year to 152.4 billion yen

Regions with strong growth:

  • Europe: Surged 24.6% year-on-year to 370.2 billion yen
  • Asia (excluding China): Grew 6.7% year-on-year to 207.9 billion yen
  • Central and South America: Rose 25.6% year-on-year to 75.8 billion yen

Europe’s growth was fueled by increased infrastructure spending, renewable energy projects, transportation networks, urban renewal, and equipment replacement cycles. Asia (excluding China) benefited from rapid urbanization in Southeast Asia. Central and South America saw growth driven by mining and infrastructure investments.

JCMM analyzed:

“The main driver of the market is shifting from North America to Europe.”


This shift represents a significant change in the global landscape, as Europe has become the new growth engine. Japanese manufacturers are adapting to stricter EU environmental rules, driving demand for electric and hybrid construction machinery.


Domestic Sales by Product


Domestic sales showed a mixed performance:

Products with growth:

  • Construction cranes: Up 2.3% to 225.3 billion yen
  • Concrete machinery: Up 11.1% to 39.5 billion yen
  • Parts and components: Up 4.2% to 153.9 billion yen

These segments provided a bright spot in the weak domestic market, supported by steady demand for large-scale projects, urban construction, and after-sales maintenance.

Products with weak performance:

  • Tractors: Down 17.6% to 122.6 billion yen
  • Hydraulic excavators: Down 10.4% to 258.0 billion yen

The decline reflects slower agricultural investment, reduced construction activity, and broader weakness in Japan’s domestic construction sector.


December 2025 (Single Month)


December data showed a clear recovery trend:

  • Total shipment value: Up 7.3% year-on-year to 325.5 billion yen (2 consecutive months of growth)
  • Exports: Up 7.5% year-on-year to 224.8 billion yen
  • Domestic sales: Up 6.9% year-on-year to 100.7 billion yen

Both exports and domestic sales rebounded for two straight months.

JCMM stated:

“The European market remains strong, and the rental market is also performing robustly.”


The rental equipment trend continues to support demand, as construction companies prefer flexibility and lower upfront costs.

December Regional Breakdown


  • Europe: Jumped 36.3% year-on-year to 38.3 billion yen (7 consecutive months of growth)
  • Central and South America: Soared 69.5% year-on-year to 9.8 billion yen (5 consecutive months of growth)
  • North America: Rose 12.1% year-on-year to 84.9 billion yen (2 consecutive months of growth)


Outlook for 2026


JCMM is cautiously optimistic about 2026:

  • Exports are expected to keep growing, led by Europe, Asia (excluding China), and Central and South America.
  • Domestic sales will remain under pressure due to demographic challenges and slow economic growth.

To maintain growth, Japanese manufacturers will focus on:

  • Technological innovation
  • Eco-friendly & high-efficiency equipment
  • Further expansion in high-growth overseas markets

Increased public infrastructure investment could also help support the industry’s long-term recovery.
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