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EMEA drives sales fell by 17.8% in 2020, but global sales rebound

28 October, 2021

Global sales of low-voltage AC drives fell by about 8.9% during 2020, with the EMEA region being hit hardest with sales plummeting by 17.8%, according to new data from Interact Analysis. The Americas experienced a 11.9% contraction, but in the Asia-Pacific region sales actually grew by 1.1%, driven by the Chinese economy which expanded despite the pandemic.

But Interact now expects global revenues for LV drives to overtake pre-pandemic levels as soon as 2022. It predicts that the global market will grow with a CAGR of 4.8% between 2020 and 2025.

The first half of 2021 saw a significant increase in order volumes for LV drives – by up to 20-30% in some cases. Most of these orders were for delivery in the second half of the year, indicating that there has been significant stockpiling. Interact therefore expects the high rate of orders to level off, and predicts that global sales of LV drives will expand by 7.7% for the whole of 2021 – similar to the expected growth rate for global manufacturing as a whole – although this excludes sales to non-manufacturing sectors such as mining.

In a blog, Blake Griffin, a senior analyst with Interact, points out that the performance of the LV drives market is tied closely to global manufacturing output. In “normal” economic crises, manufacturing tends to suffer a sharp contraction, followed by a strong rebound, before plateauing. But the Covid-19 crisis has been different, with the slow vaccine uptake, labour shortages and supply chain disruptions coming together to result in a much slower recovery in the manufacturing sector – and therefore in the LV drives market – than might have been expected.

Turning to prices, Griffin says that historically, drives prices have fallen steadily by about 1–2% per year as a result of fierce competition among vendors and the fact that Chinese customers have developed a taste for less-functional, lower-cost drives. In 2019-2020, prices stayed flat, with the average selling price for a drive being $543.60. But since then there has been an uptick in pricing, with global prices rising nearly 2.5% during 2021, lifting the average selling price to $556.60.

Global market for LV AC drives by regions, showing revenues (in $1,000) on left-hand axis and growth (%) on right-hand axis. The Asia-Pacific region survived the Covid pandemic well, while EMEA and the Americas saw significant dips in revenues. Interact expects a steady recovery, not a V-shaped bounce-back.
Source: Interact Analysis

This price rise has been driven by the shortage of semiconductors, and is likely to remain at that level. Interact does not expect the semiconductor market return to normal until the second half of 2022, or even 2023. There are two other price drivers – the shortage of raw materials and high shipping costs. As a result, gradual price erosion will not resume until 2024 at the earliest, Interact predicts.

Drives manufacturers with a strong presence in the Asia-Pacific region have benefited from its relative buoyancy, with ABB, Fuji and Inovance, gaining global market shares of around 1%, 0.5% and 0.3% respectively, according to Interact. However, not all drives vendors with a strong foothold in the region have fared as well. Siemens, for example, the second-largest supplier of drives in the APAC area experienced a 0.5% drop in global sales, because its biggest market is Germany which experienced a serious collapse in manufacturing during the pandemic, particularly in the automotive sector.

Interact Analysis:  Twitter  LinkedIn

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