The off-highway equipment market continued to face macroeconomic challenges and a delayed recovery in 2025, even as the pace of innovation in product development remained steady. To understand the key trends shaping the industry this year — from system-level design and electrification to autonomy and sustainability — OEM Off-Highway spoke with Daniel Winter, president of Danfoss Power Solutions. Read on for his insights.
Daniel Winter, President, Danfoss Power SolutionsDanfoss
What challenges most affected the off-highway mobile equipment landscape and product development in 2025?
Market dynamics continued to challenge the off-highway equipment market in 2025. Last year at this time, we were predicting improvement compared to 2024, but the ongoing macroeconomic challenges and dynamic tariff situation delayed recovery. Growth will return, but it’s still difficult to predict when. At Danfoss, we are seeing stronger order intake, and we expect modest acceleration in 2026. China is seeing growth, India and the EU are showing stability, and the situation in the U.S. is gradually improving despite market conditions. On a positive note, product development did not slow down in 2025. The pace of innovation remained steady, with Danfoss bringing a number of new products to market across our five divisions.
How would you characterize the current state of the off-highway mobile equipment design industry, and what major shifts have you observed over the past year?
Major shifts don’t happen quickly in the off-highway market, but one notable change we are seeing is a transition from component supply to system supply. This is happening for several reasons: one being the drive for greater efficiency and productivity. Designing the most efficient, productive machine means choosing components that work well together and optimizing performance at the systems level. Reactive linear control systems will be replaced by integrated solutions that offer greater intelligence and enhanced component interaction. Validated system solutions eliminate much of the integration work an original equipment manufacturer (OEM) would typically manage, maximizing performance and value. A good example is e-hydraulic solutions, where it’s becoming increasingly common to source integrated products such as e-pumps rather than a separate electric motor and hydraulic pump. Another reason for the shift to system supply is shorter OEM design cycles. To meet aggressive timelines, OEMs need trusted partners capable of delivering more than components. Fully validated solutions coupled with a collaborative engineering approach accelerate development, enabling faster product launches.
What emerging customer needs or regulatory pressures are having the strongest influence on your product development roadmap?
The need for higher levels of efficiency is a key product development driver at Danfoss. This comes from both customer and regulatory pressure. More efficient machinery reduces fuel consumption, thereby lowering operating costs as well as emissions. In electric machinery, efficient subsystems extend battery runtime or reduce the number of battery packs required, improving the business case for electric vehicles (EVs). Legislation may require OEMs and suppliers to consider the impacts of a machine throughout its lifecycle, which means assessing end-of-life options such as remanufacturing and recycling. We see sustainability shaping machine systems toward increasing levels of efficiency and circularity in the years to come, and we are meeting these demands with our expertise in both hydraulics and electrification.
How are advancements in electrification, hybrid powertrains, or alternative fuels shaping engineering priorities?
We don’t yet see a clear path forward in terms of the powertrain of the future. As a full-line supplier, that’s a dilemma. We have to keep developing solutions for any possible outcome and make sure we’re moving at the right pace. What we believe to be true, however, is regardless of the powertrain, both hydraulic and electric solutions will have a place. In fact, there’s a convergence happening between traditional mechanical and hydraulic technology and electric technology. Over the next 10 years, we’ll see a lot more melded technology. Hydraulics/electrics and mechanics/electrics will come together as integrated solutions. It will be difficult to separate the two, and you won't find machines that are only one or the other. Every machine will have a mix. As a solutions company, our goal is to provide the right technology that offers value to OEMs and the off-highway industry, whether the platform is conventional, electric, hybrid or alternative fuel-based.
What role is autonomous functionality playing in equipment designs, and what milestones do you expect in 2026?
Autonomous functionality is driving improvements in the productivity, safety and operational efficiency of off-highway machinery. Today, partial autonomy is commonplace in machines, with operator-assist features and perception systems reducing operator fatigue and optimizing workflows. Looking ahead, we expect to see more task-level autonomy, meaning we’ll transition from assistive features to autonomous execution of specific tasks. We also expect enhanced perception and localization through the implementation of more robust sensor fusion and models that deliver reliable performance in complex environments. Finally, functional safety standardization will enable us to achieve greater alignment between OEMs, standards bodies and regulators on safety expectations.
How is connectivity influencing how you design, update and support your products?
We’re a firm believer in the power of connectivity to drive efficiency, sustainability, and profitability. Danfoss partners with Trackunit and Proemion to offer connectivity solutions to OEMs and fleet operators. Our partners’ systems integrate with Danfoss hardware and the PLUS+1 Service Tool to provide remote diagnostics, service, and updates, which increases machine uptime and reduces costs by eliminating unnecessary service visits. Machine data systems and telematics also help us understand how a machine is actually used in the field. From that data, we can produce statistical representations that our designers can use to tailor products to the application. This helps us design the perfect product for the need, which is important to ensure the cost of the machine aligns with market and customer expectations.
What changes are you seeing in operator expectations, and how are these influencing cab design and human-machine interfaces (HMIs)?
Operator expectations are changing, driven by two key factors: the labor shortage and the influence of consumer technology. The labor shortage means that experienced operators can be more selective about where they work. They may look for modern machinery with greater comfort and ergonomic controls, like that of a car. Younger operators are digital natives; they may expect a machine's user interfaces to be as responsive and intuitive as smartphones and tablets. In response to these shifting expectations, we’re increasingly seeing cabs with large, high-resolution touchscreen displays with support for advanced graphics and even web browsers. Customizable displays enable operators to arrange the controls and information to their liking. Displays can also show clear diagnostic information to maximize productivity. Advanced operator-assist functions are readily accessible through HMIs, supporting less experienced operators by simplifying complex tasks and automating repetitive functions. In short, modern machine cabs are evolving into intelligent, connected command centers designed to make the operator's job easier, safer and more comfortable.
How have supply chain conditions in 2025 affected design decisions or material choices?
In 2025, Danfoss focused on resiliency in our operations, including our supply chain. We’ve applied lessons learned from recent market volatility to our product development process, along with sustainability considerations. When we design new products, we look to our existing portfolio for ideal parts. Using reliable, field-proven parts in new designs maximizes component lifetime, minimizing waste and total cost of ownership. It also reduces the number of parts to stock and variations to manage. Circularity assessments are now a standard step in our product development process. We look at the full product lifecycle, from design and manufacturing to remanufacturing, recycling and responsible disposal. As an example, our new X1P pump combines trusted Danfoss controls, shafts, bearings and rotating kits, backed by millions of hours in the field. With fewer friction points in the pump’s design, remanufacturing is more streamlined, resulting in fewer parts that need to be replaced.
What digital tools, like AI or digital twins, are becoming essential to your product development workflow?
“Strong digital backbone” is one of the foundational elements of Danfoss’ LEAP 2030 strategy. We’re building a robust digital infrastructure to drive efficiency and maximize productivity. “Amplify with AI” is a strategic priority, and we’re deploying it in many areas of our business, including operations, customer engagement, and product development. For example, we’re using AI for first-pass software generation and to convert legacy code, making our programmers’ work more efficient. AI also plays a role in the development of our autonomous machine control solutions. Digital tools like AI are increasing intelligence, speed, and quality, which ultimately allows us to deliver greater value to our customers.
How is sustainability influencing your design strategy, from materials to life-cycle management?
Sustainability is part of the Danfoss DNA. In part because of our Scandinavian heritage, we've always been focused on lowering energy consumption and making sure the solutions we develop are at the top end of energy efficiency. Sustainability roadmaps are part of that. They guide our divisions’ product development and circularity efforts, with activities embedded in the earliest stages of our product development process. We source circular or sustainable materials, preferably produced with green energy, where possible. We also partner with distributors and other companies to provide repair and remanufacturing services that extend a product’s useful life. Hydraulic components contain a significant portion of metals, which makes them ideal for recycling at the end of the product lifecycle. Electronics recycling is more complicated because of the challenges in separating components into the different material types, but we are working on projects with recycling partners that push the limits of what’s possible. This is important, considering the increasing amount of electronic content on modern machinery. Collaboration is also central to our approach. We actively work with our customers on sustainability-related topics such as product compliance, material substance, transportation options, and life-cycle optimization.
In 2026, what innovations will have the greatest impact on competitive differentiation?
Today, machine differentiation is almost always achieved through software. We can and will continue to optimize component geometries, but this may only produce incremental improvements. There’s potential for significant performance gains at the systems level. We demonstrate this every day at our Application Development Centers (ADCs). On just about every project we’ve done at our ADCs over the last 10 years, it has been easy to produce a 10% improvement in productivity, and not uncommon to achieve a 30% improvement. Innovative hardware and alternative architectures have great potential to differentiate off-highway machinery, as do solutions that reconsider a component’s core technology. At Danfoss, we’re working on multiple step-change technologies, with the aim to drive sustainable innovation that helps our customers differentiate their machines and systems.
