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The global off-highway vehicle engine market size was valued at USD 22.45 billion in 2022. The market is projected to grow from USD 23.59 billion in 2023 to USD 35.79 billion by 2030, exhibiting a CAGR of 6.1% during the forecast period.
Off-highway vehicles are motorized vehicles designed for off-highway use, specifically on uneven terrains. These vehicles are utilized in agricultural and construction activities for various operations such as raw material transportation and various agricultural and construction activities. These vehicles require specially built engines designed for high power and load-carrying capacity.
The surging utilization of off-highway vehicle engines is attributed to the positive growth in agricultural and construction machinery sales worldwide. Rapid urbanization and increased infrastructure activities across residential and non-residential areas have accelerated the demand for construction machinery. Moreover, increasing government initiatives, specifically in emerging economies, to increase agricultural mechanization have fueled the demand for agricultural machinery such as medium and heavy-duty tractors in the regions. Owing to these factors, as the adoption of construction & agricultural machinery increases, so is the demand for off-highway vehicle engines across the globe.
Increasing Number of Construction & Agricultural Activities to Drive Market Growth
The COVID-19 pandemic has positively impacted the off-highway vehicle engine market growth. During the pandemic, it was expected that the market would witness a significant drop. However, the market performed better during the COVID-19 pandemic than was expected before the outbreak of COVID-19. Massive stimulus spending in China in the construction equipment industry was one of the most crucial factors in this remarkable market performance amid the pandemic. Other factors, such as surging tractor sales across various regions, also benefited the market. For instance, in India, tractor sales grew during the COVID-19 era. From April 2010 - December 2020, nearly 660,341 tractors were sold in the India market, witnessing a growth of approximately 17.35% for the same period. These surging tractor sales influenced the market growth during the pandemic.
However, a few regions witnessed a drop in off-highway vehicle sales due to dropped construction projects and agricultural activities. For instance, according to the European Agricultural Machinery Association (CEMA), in 2020, Europe witnessed 3% drop in overall agricultural tractor sales compared to 2019. As per CEMA, after post-pandemic recovery, Europe registered significant growth in tractor sales in 2021. Government lockdown measures and increasing agricultural & construction-related activities drive sales.
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Adoption of Off-highway Vehicles Powered by Alternative Fuels is an Ongoing Trend in the Market
Increasing government regulations on fossil fuel-powered vehicles influence manufacturers to develop emission-free vehicles to fight climate change. Similarly, there is increasing consumer preference toward adopting emission-free vehicles due to environmental concerns fueling the adoption and development of off-highway vehicles powered by alternative fuels such as natural gas, electricity, and others.
For instance, in December 2022, CNH Industrial, one of the largest off-highway vehicle manufacturers, unveiled T7 Methane Power Liquefied Natural Gas (LNG) pre-production prototype tractor. The company is focused on developing off-highway vehicles with low carbon footprints. Similarly, various companies also focus on developing fully-electric off-highway vehicles as future solutions. These initiatives by the manufacturers to stay ahead of the competition are anticipated to propel the market growth.
Rise in Agricultural Mechanization to Propel the Adoption of Off-Highway Vehicles
Large-sized farms in North America and Europe necessitate the use of agricultural machinery. Furthermore, increased awareness among farmers in emerging economies regarding the benefits of agricultural machinery and government initiatives, such as agricultural mechanization programs implemented in South Korea, has fueled the demand for agricultural equipment such as heavy-duty combine harvesters and tractors in this region.
Agricultural mechanization enables the maximization of productivity while considerably reducing labor input hours. Higher engine capacity tractors and combined harvesters enable farmers to enhance production and increase farm productivity. Hence, an increase in the adoption of agricultural machinery is expected to propel the market growth of off-highway vehicle engines.
Rapid urbanization, greater per capita income, and increasing population growth, particularly in emerging economies, have surged the global demand for infrastructure. Furthermore, greater participation by the private sector in infrastructure projects coupled with an increase in government expenditure on these projects has fueled the demand for construction machinery equipment, which, in turn, propels the demand for off-highway vehicle engines used in these projects such as loaders, excavators, and truck-mounted cranes, among others.
Growing Emissions and High Operating & Maintenance Costs Restrain Market Growth
Owing to a greater need for environmental sustainability, electrification, particularly in construction machinery, has increased over the past few years. However, higher capacity performance is not yet comparable to diesel engines, and thus sizable off-highway diesel engines are preferred mainly in agricultural (tractors) and construction equipment (bulldozers, loaders). However, off-highway vehicles equipped with diesel engines generate significant emissions.
A U.S. Environmental Protection Agency study states that large off-highway diesel engines contribute substantial amounts of NOx and particulate matter emissions. Furthermore, operating costs are also high due to high power requirements, resulting in greater fuel consumption. Hence, emission control and high operating costs will likely restrain the market growth.
Increasing Investment in Construction Sector in Asia Pacific to Favor Construction Machinery Segment Growth
By power output, the market is classified into agriculture machinery and construction machinery. These two segments are further bifurcated into less than 100 HP, 101-200 HP, 201-400 HP, and more than 400 HP for construction machinery and less than 30 HP, 31-50 HP, 51-80 HP, 81-140 HP, and more than 140 HP for agricultural machinery.
The construction machinery segment dominated the market in 2022. An increasing number of construction and infrastructural activities across emerging economies, rapid urbanization, and government focus on developing smart cities is anticipated to drive the market during the forecast period. The demand for backhoe loaders, dozers, and excavators equipped with 101-200 HP engines is the highest globally for efficient operations. Hence, the 101-200 HP segment held the largest market share in construction machinery.
The agricultural machinery segment is anticipated to witness the fastest growth rate during the forecast period. An increasing government focus on farm mechanization and an inclining focus of the farmers toward improving convenience in farming operations are likely to drive the market growth of off-highway vehicle engines. The 51-80 HP segment is anticipated to grow at a higher CAGR owing to greater demand for medium-duty tractors in Asia Pacific, which holds the largest agricultural machinery segmental share.
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High Load Carrying Capacity of Diesel Engine Vehicles to Propel Diesel Segment Growth
The market is segmented into diesel, gasoline, and others based on fuel type.
The diesel segment dominated the market with the largest market share in 2022. Demand for diesel-powered off-highway vehicle engines for their high load-carrying capacity and power for various agricultural & construction applications is driving the market growth. According to a recent European Agricultural Machinery Association study, IC engines with high-power density fuels, such as diesel, are likely to remain the preferred option among consumers owing to their powerful performance and flexibility such as easy refueling. Furthermore, they avert issues such as the charging infrastructure required for electric machinery. Hence, the diesel engine segment will likely dominate the market over the forecast period.
The others segment is anticipated to witness the fastest growth in the market. Electrification of heavy-duty machinery in the construction industry, such as excavators and loaders, has increased over the last few years. Key OEMs, such as Komatsu and Caterpillar, which account for most of the market share, are increasing their electric construction equipment portfolio, improving their commercial viability among potential customers. These factors lead to the positive growth of this segment.
Asia Pacific Off-Highway Vehicle Engine Market Size, 2022 (USD Billion)
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Increasing Number of Construction-Related Activities across Asia Pacific to Fuel Market Growth
Regionally, the global market is categorized into North America, Europe, Asia Pacific, and the rest of the world.
Asia Pacific dominated the market with the largest market share in 2022. The market in Asia Pacific is characterized by growth in infrastructure activities, such as road construction and housing, which fuels the demand for construction equipment. It augments the growth of the market for off-highway vehicle engines. Moreover, India and China are also among the largest tractor markets in the world, with government policies aimed at improving the adoption of agricultural machinery over the next few years. These factors are responsible for the dominance of Asia Pacific in terms of the off-highway vehicle engine market share.
The Europe market is expected to show good growth over the forecast period owing to greater adoption of heavy-duty agricultural tractors and exponential growth of non-residential construction activities, which propels the demand for off-highway vehicles engines used in such operations. North America is also anticipated to show good growth in the market owing to rising government spending on municipal infrastructure projects that have contributed to the high demand for construction machinery, which boosts the production of engines used in off-highway vehicles. North America and Europe are expected to exhibit similar off-highway vehicle engine market trends.
Leading Players to Focus on Expanding Manufacturing Operations Globally
The key off-highway vehicle engine players include engine manufacturers, such as Deutz AG, construction equipment manufacturers, such as Hitachi Construction Machinery, and agricultural tractor manufacturers such as Mahindra & Mahindra Ltd. The majority of OEMs are focused on the expansion of manufacturing operations via joint ventures and strategic partnerships. For example, the production capacity of European OEMs is concentrated mainly in Europe, with more than half the OEMs having no production footprint in other continents. Therefore, key players are focused on enhancing production capabilities via partnerships and sharing technologies, with regional manufacturers, particularly in China and India.
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The research report provides detailed analysis and focuses on key aspects such as leading companies, power outputs, design, and technology. Besides this, the report offers insight into the market trends and highlights key industry developments. In addition to the factors mentioned above, the report encompasses several factors that have contributed to the growth of the market in recent years.
CAGR of 6.1% from 2023 to 2030
Value (USD Billion) & Volume (Thousand Units)
By Power Output
By Fuel Type
Fortune Business Insights say that the market was valued at USD 22.45 billion in 2022 and is projected to reach USD 35.79 billion by 2030.
The market is expected to register a CAGR of 6.1% during the forecast period (2023-2030).
Rising number of infrastructural & construction activities are anticipated to drive the global market growth.
Asia Pacific led the market in 2022
Komatsu Ltd., Caterpillar Inc., Deere & Company, and Cummins Inc. are the major players in the global market.
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