With very few exceptions, 2024 was a tough year for the off-highway machinery market. Over-production and burgeoning inventories in 2023 have been coupled with weak demand in many end markets in 2024 was a perfect storm for OEMs and suppliers. While there should be some improvement in 2025, it won’t be uniform and is unlikely to begin until the second half of the year.There are four ways in which OEMs and suppliers can be successful in a down market.
1. Get duty cycle data about electrification; prepare for the upswing
If 2024 has been a difficult year for the off-highway equipment market, it has been even more so for the nascent electric machinery market. However, that means now is the time to double-down on investments in developing electrified and alternatively fueled vehicles. Why? Because as these vehicles become increasingly common, one of the critical product differentiators will be how efficiently they operate across a range of duty cycles.
Companies that have invested in early deployment of electrified machines will have a far greater understanding of how to optimize these machines to make use of available battery charge and charging opportunities. Those that don’t do so run the risk of selling products that are significantly less competitive in terms of performance and usability. It is critical — even in a down market — to prepare for the upswing and the ongoing technological transition to low and zero emission machinery. Even if R&D budgets are tight, look for opportunities to collaborate with industry peers, system integrators or your own dealer network.
2. Retrofit solutions
Equipment buyers may not be in the market for new machinery. Tight financial conditions preclude outright purchases for some equipment operators and high interest rates may prevent or deter others from making finance purchases. But this doesn’t mean that equipment owners don’t want new features or the ability to extend the working life of their machinery.
In many instances, retrofit solutions offer a great way for operators to add features or extend the working life of their machines, often at substantially lower cost than that of a new machine. Remanufactured engines are common, particularly in very intensive applications like mining, or for vehicles with high uptime requirements. In recent years, retrofit of entirely new powertrains has also become common as operators in certain markets look to comply with localized emission regulations and targets by shifting to battery electric machines.
It isn’t just retrofit of new powertrains either, there are examples of automation or other technologies being offered as add-ons to extend the useful life of machines. 3D machine control for excavators or precision solutions for tractors are just two of the low-cost paths available to operators to upgrade their machines.
3. Keep talking about efficiency
Fuel costs are a perennial concern for all machine operators. Oil prices remain elevated versus pre-covid levels and are a key contributor to project cost inflation and project cancellations. Further escalation of the regional conflict in Israel and the Middle East may see oil prices head upwards again.
From a marketing perspective, a down market is the perfect time to highlight machine maintenance and service offerings. Marketers can tie efficiency best practices to reducing project costs and prolonging machine life; ensure correct tyre inflation, check service intervals, make use of telematics data and more.
Operators are typically interested in upgrading machines to more efficient models. However, they might not be in a strong enough financial position to do so at present. Identifying fleets or operators that are "in the market to buy new but can’t" for service offers will keep them involved in a sales conversation and drive revenue in the short term. Furthermore, highlighting new features that are coming in the next year, such as new engines and new efficient technologies, will keep potential buyers engaged until the market returns to more positive conditions.
4. Find labor shortage solutions
There is a ticking time bomb in many mature economies. An aging population is coupled with low interest in jobs that are perceived to be physically hard, including construction or agriculture. The result of this is growing problems with labor shortages for many roles where older workers are retiring and younger workers aren’t interested in replacing them.
While many futurists and technologists would have you believe that robotics and full autonomy is the future, there are solutions that can be adopted now to make better use of the employees and machines that are available.
Augmenting operators’ existing skills is one way to boost productivity. 3D machine control can help upskill operators by enabling more precise, repeatable control of certain functions and tasks in earthmoving machines. Combined with tilt rotators or quick couplers to allow for a variety of attachments, one machine and one operator can be transformed into a system that is more precise, quicker and more efficient.
Improving working conditions will retain and attract employees. Safety features and better operator conditions, such as air conditioning, suspension seating, enhanced controls, etc., make for a better workplace. This is a relatively simple and cost-effective approach to addressing today’s labor shortages.
Organizations involved in deploying machines also need to be made aware of advances in machine design and how to better utilize assets to maximize the use of the employees they do have. For example, using the correct machine or attachments could make the difference between sending several machines or just one machine to a site. OEMs that work closely with end users — either directly or through rental partners — can perhaps influence these discussions and promote better outcomes.