Off-Highway Vehicle Engine Market Size, Share & Industry Analysis, By Power Output (Construction Machinery (Less than 100 HP, 101-200 HP, 201-400 HP, and More than 400 HP) and Agriculture Machinery (Less than 30 HP, 31-50 HP, 51-80 HP, 81-140 HP, and More than 140 HP)), By Fuel Type (Diesel, Gasoline, and Others), and Regional Forecast, 2024-2032

The global off-highway vehicle engine market size was valued at USD 218.61 billion in 2023. The market is projected to grow from USD 277.83 billion in 2024 to USD 1,077.43 billion by 2032, exhibiting a CAGR of 18.5% 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.

The COVID-19 pandemic positively influenced the market, primarily driven by the stimulus spending in China for construction equipment. Surging tractor sales also contributed the market development post-pandemic. As per CEMA, after post-pandemic recovery, Europe registered a significant growth in tractor sales in 2021.

Off-Highway Vehicle Engine Market Trends

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 November 2023, Caterpillar unveiled a three-year program to demonstrate the hydrogen-hybrid power solution built on the Cat C13D engine platform. The development of a transient-capable system for off-highway applications was supposed to be initiated during the first quarter of the year 2024. Caterpillar serves as the primary contractor of the project. The company provides engine research and development as well as system integration. Thus, the adoption and development of off-highway vehicles powered by alternative fuels is attributed to fuel the market development over the forecast period.

Off-Highway Vehicle Engine Market Growth Factors

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.

In June 2022, Mercedes Benz signed a partnership with Grunner, a Brazilian agricultural technology manufacturer. Under the partnership, the Mercedes-Benz Axor was configured specifically for automated harvesting operations. By the end of the year, the company aimed to deliver 640 vehicles to Grunner for modification purposes.

RESTRAINING FACTORS

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.

Off-Highway Vehicle Engine Market Segmentation Analysis

By Power Output Analysis

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 2023. 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.

By Fuel Type Analysis

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 2023. 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. Moreover, companies are focused on developing efficient diesel engines for off-highway applications. For instance, in February 2023, Cummins unveiled a diesel engine named X10, which emits 75% less NOx emissions and is expected to launch in 2026. All these factors drive the segment growth.

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.

REGIONAL INSIGHTS

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 2023. 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.

List of Key Companies in Off-Highway Vehicle Engine Market

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.

LIST OF KEY COMPANIES PROFILED:

• Caterpillar Inc. (U.S.)


• Cummins Inc. (U.S.)


• Deutz AG (Germany)


• Kubota Corporation (Japan)


• Deere & Company (U.S.)


• Komatsu Ltd. (Japan)


• Hitachi Construction Machinery Co. Ltd. (Japan)


• AGCO Corporation (U.S.)


• JC Bamford Excavators Ltd. (U.K.)


• Mahindra & Mahindra Ltd. (India)

KEY INDUSTRY DEVELOPMENTS:

• January 2024 - Bosch Rexroth partnered with Modine, a thermal management manufacturer. The partnership aimed to develop Modine EVantage thermal management systems to be added to the Bosch Rexroth portfolio of eLION products for electrified off-highway machinery globally.


• June 2023 - Zero Nox Inc., which specializes in sustainable, off-highway vehicle electrification, signed a product development agreement with Kubota Corporation. The agreement is based on electrifying products for off-highway applications.


• June 2023 - Forsee Power signed a partnership with Vensys Group to convert thermal off-highway vehicles into electric vehicles. Forsee Power is a smart battery systems provider, whereas Vensys Group specializes in electrohydraulic solutions for agriculture and construction.


• April 2023 – New Holland unveiled its new multifunctional straddle tractor TE6 range specially designed for narrow vineyards, requiring compact machines and maneuverability. The company stated that the new range will be available by the end of 2023.


• March 2023 – John Deere unveiled New 85 P-Tier Excavators during CONEXPO. The new 85 P-Tier provides a horsepower increase of nearly 18% compared to the 85 G-Tier model. Additionally, it also offers turbo for high altitude performance.


• June 2022 – Mahindra Tractors introduced six new tractor model ranges under its recently launched Yuvo Tech+ brand. The new model has been developed at Mahindra’s Research Valley (MRV) in Chennai and is powered by the company’s new ELS 4-cylinder and m-ZIP 3-cylinder engine.


• April 2021 – JCB unveiled 45 new or improved machines in its first major product launch of 2021. The aim of the new product announcements is the adoption of EU Stage V emissions-compliant diesel engines.


• February 2021 – Kohler announced its Kohler KDI 3404TCR SCR Engine, a four-stroke in-line diesel engine featuring a high-pressure injection and a turbocharger.

REPORT COVERAGE

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.

Report Scope & Segmentation