KDV 4.1-30-3-S100 After achieving double-digit growth in 2022, the growth rate of the global low-voltage AC motor market slowed down significantly in 2023. While still positive, revenue growth in 2023 will be only 4.2%. The 4.2% growth rate, compared with 21.5% and 16.4% in 2021 and 2022, indicates that market size growth has slowed considerably. It is expected that in 2024, the market growth rate will further decline, and gradually deviate from the explosive growth in 2021 and 2022.

Interact Analysis expects the market to contract by about -0.7% in 2024, marking the bottom of this cycle for the global low-voltage AC motor market.

Analysis of 2023 global low-voltage AC motor market performance

KDV 4.1-30-3-S100 Over the past three years, the global low-voltage AC motor market has experienced significant revenue growth, with a year-on-year growth rate of 16.4% in 2022. However, a large part of the high growth is due to price increases, and the significant decline in income growth in 2023 is largely due to the absence of price increases.

Market revenue size and future forecast for low-voltage AC motors for industrial and commercial applications

From the perspective of motor sales (number of units), the slowdown is not obvious. In 2023, sales volume is expected to achieve 2.9% year-on-year growth, down from 4.0% in the previous year. Although small, the decline in sales growth also indicates that market demand is falling.

KDV 4.1-30-3-S100 In the period from 2020 to 2022, the backlog of orders continues to increase as the market demand for motors far exceeds the production capacity of suppliers. The post-pandemic rebound in global demand, combined with poor supply, affected the entire 2021-2022 period and continued into the first half of 2023. But in the second half of 2023, the supply and demand situation in the global market changed rapidly.

As interest rates continued to rise, while macroeconomic uncertainty led to project demand delays, from June 2023, the volume of new orders for low-voltage motors showed a significant decline. This has led to a rapid reduction in orders accumulated by motor suppliers, with many experiencing a contraction in business in the last six months of 2023. Therefore, for the global low-voltage motor market, 2023 has changed from a growth rate that continues to be higher than normal years to a flat growth rate.

In early 2023, signs of a slowdown in global growth have already begun to emerge. In the US market, the Federal Reserve compiles and releases a series of data tracking the year-on-year growth rate of industrial machinery production on a monthly basis. As early as February 2023, the output value of the industrial machinery production industry has begun to contract. As the chart below shows, that decline is continuing today.

KDV 4.1-30-3-S100 Us industrial machinery manufacturing compared to the same month last year. Source: Federal Reserve Economic Data (FRED)

Although this chart is specific to the US market, it also reflects trends we have learned from vendor interviews in other regions. Considering that approximately 70% of motor revenues come from machinery and equipment manufacturer Oems (as opposed to the end-user industry), the contraction of the machinery manufacturing industry has had a significant impact on the demand for motors.

2024 and beyond

KDV 4.1-30-3-S100 We expect this downward trend in growth to continue in 2024, with the global low-voltage motor market forming the “bottom” of this cycle, with a 0.7% year-on-year decline in market size. While performance varies across regions – some markets are expected to maintain growth this year – regional markets are expected to at least generally experience slower growth compared to 2023. The weak performance of overall manufacturing demand is the core factor of this market contraction, but we also expect the average selling price of motors to decline slightly, which further exacerbates the decline in market revenue.

From the price point of view, after two years of rapid rise, the average price of low-voltage motors in the global market in 2023 remained stable. However, due to the expected sluggish demand in 2024, large customers will have stronger bargaining power in negotiations with motor manufacturers. This could put downward pressure on the average selling price of the motor market.

KDV 4.1-30-3-S100 After bottoming out in 2024, what will happen in 2025?

Our forecast shows that with the recovery of the industrial machinery production industry and the motor price growth rate returning to the expected level of 2-3% per year, the global low-voltage motor market will return to growth in 2025. Reviewing Interact Analysis’s continuous tracking of 16 years of historical data on the market, the output value of the machinery manufacturing industry has never contracted for two consecutive years, based on this trend, we expect that the low-voltage motor market will also return to the growth track in 2025.

Global industrial machinery manufacturing industry year-on-year growth rate. Source: Interact Analysis’ Global Manufacturing Output Tracking Index (MIO)

Based on the expectation of a rebound in manufacturing demand in 2025, we expect global low-voltage AC motor sales to return to growth by then and maintain growth through the forecast period to 2028.

Write at the end

After experiencing strong growth in the past few years, the low voltage motor market is now cooling down, making many motor manufacturers looking for new growth opportunities. We note that among the many application industries of motors, industries closely related to government spending are still growing above the market average. After the pandemic, many large economies passed regulations on improving infrastructure as a means of stimulating the economy, which effectively boosted the motor market demand during the manufacturing downturn. For example, sectors such as power, water and wastewater treatment are showing above-average growth rates. With the gradual investment of government funds according to the plan, these areas will continue to grow.