A new report from global research firm Fact.MR forecasts the global off-highway engine market is expected to grow rapidly in the next 10 years. Fact.MR predicts the market will achieve a 7% compound annual growth rate (CAGR) from 2021-2031.
In the past half decade it says the market grew at a 2.3% CAGR due to high demand for use in construction and agriculture equipment, as well as the marine sector and gensets.
Fact.MR says demand for off-highway equipment will grow in the coming years due to large-scale infrastructure investments, leading to higher demand for engines as well. Growing use of industrial trucks (i.e. forklifts) by manufacturing and warehousing industries will also increase demand for off-highway engines.
The COVID-19 pandemic negatively impacted the market in 2020. Fact.MR says the off-highway engine market declined 4.4% in 2020. However, the long-term outlook for the industry appears to be more positive as more industries open up or begin ramping up production.
Many companies began reporting already at the end of 2020 they were beginning to see an uptick in demand and had a brighter outlook for 2021 and on. The U.K. construction equipment market, for instance, saw a 1% sales increase in the fourth quarter of 2020 due to increased construction activity.
Engine manufacturer Cummins Inc. noted in its 2020 full-year financial report that revenues for its off-highway business were 4% in the fourth quarter of 2020, driven mostly by growth in construction and other equipment segments in China, India and other locations. Cummins is predicting 2021 revenues to be up 8-12% as all regions and major markets continue to increase demand for equipment once again.
An analyst for Fact.MR says "Increasing infrastructure spending, capacity building, and innovation for efficient engines are key drivers for off-highway engine sales."
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In general, Fact.MR forecasts the global off-highway engine market will double its value by 2031. Production of engines over 50 hp (37.3 kW) is expected to increase during that time period. Over 4 L engine sales will reach a 7% CAGR says Fact.MR. In addition, it notes there will be a rise in update of alternative fuel powered engines which are projected to add 2.1X the value to the market as customers look to improve efficiency and reduce emissions.
Industrial trucks are expected to provide a large growth opportunity for the market, at 7% CAGR, as manufacturing and warehousing activities continue to increase.
By market, Fact.MR says North America will reach a value of $11.3 billion in 2021 and continue increasing at 7% CAGR over the forecast period. The U.S. will account for close to 7% as well.
The UK market is projected to reach over 6% through 2031. China and India are both anticipated to reach an 8% CAGR over the next 10 years as infrastructure investments continue in those regions.
According to Fact.MR, East Asia will also be a region with high growth potential of 7% CAGR due again to infrastructure development, as well as global maritime trade and the manufacturing growth occurring in the region. Widespread implementation of high-end technology in the agriculture and supply chain sectors will aid engine growth, as well.