Off-Highway Vehicle Engine Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)
The Off-highway Vehicle Engine market was valued at USD 37.21 billion in 2021 and is expected to reach USD 54.67 billion in 2027 by registering a CAGR of 6.79% during the forecast period (2022 - 2027).
Off-highway vehicle engines growth is dependent on the growth rate of agricultural and construction machinery industries. Rising agriculture mechanization trend in developing countries and spike in residential and commercial construction projects globally are driving the construction and agricultural machinery markets.
Increase in demand and production of off-road vehicles is projected to boost the off-highway engine market during the forecast period. Demand for all-terrain vehicles (ATVs) is increasing due to their suitability for activities such as trekking and travelling in the exploration area. Moreover, a rise in automation in various industries such as agriculture, construction, mining, infrastructure and others has increased the use of off-road vehicles in these sectors.
However, high cost and maintenance expenditure are anticipated to significantly restrain the off-highway engine market. Regulatory bodies are imposing rigorous norms globally to reduce carbon emissions from automobiles. Off-highway Engines can be modified to reduce carbon emissions from vehicles. This is estimated to drive the off-highway engine market.
At the global level, the construction is anticipated to be one of the most profitable sectors over the next decade. The recovery of Europe’s construction industry improved business in the mining and quarrying sectors, and a favorable economic environment with low-interest rates likely to further stimulate investments into the market. Extensive modernization of agriculture by incorporating mechanization of farming practices is primarily to drive demand for off-highway engines across Asia-pacific during the forecast period.
Key Market Trends50-70 HP of Agriculture Machinery Likely to be Largest Segment by Power OutputThe market for 50-70 HP engines for agricultural machinery is expected to grow at a fast pace, witnessing a decent growth during the forecast period. Agricultural machineries under 50-70 hp category includes majorly tractors and medium-sized combine harvesters. Compact and tiny engines with better power output will boost the market growth.
These engines have a wide range of applications, from personal lawn care to modest farm operations. Consumers are turning to these tools to save time and money as technology advances and farming becomes more scientific. These engines are being used in a variety of applications, including tiny snowmobiles, golf karts, power sports, lawn movers, and pumps. The market for off-highway engines is being driven by their utility and cost-effectiveness across areas.
The medium-sized combine harvesters have an average of 4.8m length, 2.2m width, and 2.8m height that have been widely used in rice fields, especially in the ASEAN countries, like Philippines, Indonesia, Vietnam, and India. The prominent suppliers of medium-sized combine harvesters in the Asia-Pacific market includes Kubota Corporation and Yanmar Co. Ltd.
India is one of the emerging markets in the agricultural sector, which has consistently experiencing demand for more than 50 hp tractors over past three years, owing to the strong government support to Indian farmers in purchasing agricultural machineries, in order to achieve high agricultural economy in the country and rapid improvement in the tractors industry.
The growing demand for more than 50 hp tractors in Asia-Pacific and recovery in the global agricultural machinery market are anticipated to boost 50-70 hp agricultural machinery during the forecast period.
Asia-Pacific Region Likely to Dominate the Global MarketDespite volatile growth in the real estate sector, significant development of rail & road infrastructure by the countries across Asia-pacific region in order to withstand the demand stemming from the growing industrial and service sectors has resulted in a significant growth of of construction industry in the recent years. These rising infrastructural activities elevated the necessity of off-highway vehicles and such demand for their engines picked up momentum simultaneously.
As the construction industry is dominated by state-owned and private enterprises, increased government and private spending in this regard is pushing the industry toward global primacy. The market for excavators and other types of construction machinery is anticipated to strengthen in countries like India, China, Japan, etc over the forecast period. Furthermore, growing global marine traffic and the construction of significant warehousing industry in China are projected to provide a corpus opportunity for off-highway engines.
Additionally, with the increasing investments in public infrastructure, renewable energy, infrastructure, and commercial projects, the off-highway vehicle engines segment is expected to record growth at a moderate pace over the next five years, thereby improving both consumer and investor confidence.
Agricultural mechanization is expected to receive major stimulus from the recently announced self-reliance program titled Aatmanirbhar Bharat unveiled in 2020. According to the Ministry of Agriculture and Farmers Welfare, Government of India, in FY 2020-2021, INR 1033 crores (USD 140 million) is allocated towards mechanization, thus expected to fuel prospects for off-highway engines.
Such factors expected to increase the demand for high-performance equipment in the country, thus driving the off-highway engine market.
Competitive LandscapeThe market is moderately consolidated one as majority market shares are captured by some of the major players, like Yanmar Co. Ltd, Cummins, Deutz AG, Man Engines & Components Inc., Deere & Company, Caterpillar Inc., Volvo Penta, etc. The players operating in the market are focusing on various growth startegies to gain competitive edge over other players. For instance,
Caterpillar Inc, Komatsu, Volvo CE, Hitachi Construction, John Deere, and Others are some of the key players in the market.
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