The Impact of the Top 3 Strategic Imperatives on the Off-Highway Equipment Industry

Industry Convergence

• Why:

  • Contractual agreements, mergers and acquisitions, and strategic alliances allow companies to build teams for specific industry requirements.
  • All major companies (including the profiled companies) have increased their M&A activity in 2022 and will continue to do so in the upcoming years as new players offer new-age solutions and provide speed and agility in go-to-market strategies.
• Frost Perspective:
  • The European Commission’s climate clauses demand decarbonization and the elimination of diesel between 2030 and 2040.
  • Manufacturers in Europe work together to develop alternative fuels and power to meet these requirements.
  • Similar collaborations exist in North America (NA). For example, John Deere and National Grid joined forces for electric construction.
  • Products with alternative powertrains and fuel will enter the market in the mid-to-long term based on their application, with smaller equipment entering earlier than large.

Disruptive Technologies

• Why:

  • Off-highway industry is going through a major paradigm shift in different areas of the industry, including networking (4G and 5G), data analytics (AI and machine learning), telematics, and navigation.
  • Industry players are now focused on making the equipment smart and connected with companies becoming solution providers rather than just point-of-sale equipment providers.
• Frost Perspective:
  • Original equipment manufacturers (OEMs) offer telematics packages from basic to advanced based on user preference.
  • Connected, digital, and smart construction and mining sites and connected farms with end-to-end traceability and the highest productivity will appear during the next 3–5 years in developed markets in Europe and NA and will spread into emerging countries in approximately 7–10 years.

Transformative Mega Trends

• Why:

  • The mining industry is testing and partly implementing site automation, autonomous vehicle operations, private 5G, and electrification.
  • Caterpillar and Komatsu are testing and using autonomous vehicles and private connectivity in Australia and the Americas.
  • Volvo and Liebherr combine the same technologies and electrification in their operations in Europe, Asia, and NA.
• Frost Perspective:
  • By 2030, Volvo and Liebherr plan to increase their electric and alternative fuel-powered vehicles in operation by 20%–30%.
  • Fully autonomous and automatic mining sites will appear by 2025. In 2018, Volvo CE proved electric sites successful in rigorous testing.

Scope of Analysis

• This research encompasses OEMs in the off-highway equipment industry specializing in the construction, mining, and agricultural segments.
• Units are defined through off-highway equipment types that each company offers.
• The market for telematics in off-highway equipment will generate new business models, including rental models, online sales channels, and automation services.
• This industry’s products include equipment telematics solutions, IoT hardware and the cloud, sensor technology, unmanned aerial vehicle and satellite imagery, data analytics, robotics technology, and operation management solutions (construction sites, farming, and mining).
• Research focuses on OEMs, established technology provider partnerships, and global start-up acquisitions.

Scope:

Segmentation

Off-Highway Equipment

Farm Equipment

Tractors, sprayers, combines, cotton harvesters, field cultivators, cutters and shredders, wheel tractor-scrapers, planters and seeders, plows, balers, binders, sub-soilers, harrows, rotary tillers, loaders, hullers, and grain carts

Construction and Mining Equipment

Earth-Moving Equipment

Excavators, graders, loaders, skid steers, crawler loaders, backhoes, bulldozers, trenchers, scrapers, wheeled loading shovels, underground mining equipment, and articulated dump trucks

Material Handling Equipment

Cranes, crawlers, off-highway tractors, off-highway trucks, tankers, telehandlers, and underground mining equipment

Road Construction and Infrastructure Equipment

Graders, concrete machinery, pavers and rollers, plate compactors, loaders, and tunnel boring machines

Key Findings

The Internet of Things (IoT), Sensor Technology, Data Analytics

Sensor technology and the IoT are picking up rapidly in all off-highway equipment segments because of the increasing demand for improved productivity, machinery efficiency, and reduced manual labor globally. High demand exists in the short term for the connection of machinery and its components and controlled operations for better utilization, accident prevention, operator health monitoring, and downtime eradication.

Connectivity, AI, and Robotics

OEMs and technology providers have developed connectivity devices, AI, and other solutions for tracking, monitoring, controlling, and autonomizing equipment from offsite to prepare for more connected and sustainable operations in the off-highway segment. AI and robotics in autonomous technology are in the testing phase, and commercialization will follow in the long term. Mining operations employ autonomous trucks from Komatsu and Caterpillar.

Electrification

In the short term, companies are developing electric powertrains in light, urban/residential, and road construction. These companies will scale electric tractor production in the medium term in the lower power segment (20–40 horsepower [hp]). In the long term, the fully electric and alternative fuel segment will outpace the diesel vehicle market’s growth, and companies are investing heavily for early market advantage and better customer feedback.

Online Sales and Service

All OEM websites have online portals for service and the sale of new, used, and rental equipment; and parts and components. These sites are available as mobile applications with product purchases and have monitoring facilities for service technicians to identify problems before a breakdown and alert customers, who can request service as needed. On-site visit options and remote assistance are available.

Rebuilding, Rental, and Used Sales

The companies promoted the sale of used equipment and equipment rentals since the slowdown of operations in 2020 and changed the mindsets of contractors to rent or buy used (rather than new) machinery. Used equipment with retrofitted state-of-the-art technology to meet regulations is increasing in popularity in Europe and NA. Rebuilding programs grow, allowing old machines to function as new for almost half the cost.