Is off-highway still an attractive market?

Off-highway machinery has been a steady growth market for technology suppliers for decades. The stability is part of what makes it attractive. We make machines for agriculture, construction, defence and electricity generation. These respond to basic human needs for food, shelter, security and energy. So, while there may be peaks and dips in the market, it is never going away completely.

Equally, off-highway is extremely unlikely to experience a 10x or 100x explosive sales boom. There cannot be a gold rush in the way that we have recently seen for AI. When demand does suddenly become strong, the ability of OEMs and the supply chain to react quickly becomes a limiting factor.

Most production facilities, at OEMs and in the supply chain, are only profitable above around 70% capacity. Attempts to increase capacity dramatically have often been associated with a fall in quality.

Now, in 2026, there are headwinds in Europe and America. Geopolitics, especially inflation and tariffs, are suppressing demand through real economic effects and negative sentiment. Buying capital equipment for several hundred thousand dollars requires a certain amount of optimism about the long term.

Analysts are predicting very limited market growth in 2026, perhaps as little as 1 or 2%, and not much more in 2027. This comes on the back of some tough years.

Western OEMs are also worried about new Chinese competitors. Some of these companies are still struggling with quality, parts supply and field support. For many, machine design is still derivative. However, there is a real price difference that may tempt users to take a chance.

For the moment, the market share of these new arrivals is not significant. But the fear is real, and a coordinated response has yet to be defined.

This negativity is pushing OEMs to be extremely conscious of operating costs, and R&D budgets are particularly hard hit. OEMs are still developing new machines, but these are usually upgrades to current platforms rather than bold, ground-up designs.

OEMs are chasing projects that reduce bill-of-materials costs, improve reliability, particularly during the warranty period, deliver cosmetic refreshes to cabs and styling, or achieve single-digit performance improvements. The focus is more likely to be productivity or machine flexibility than fuel efficiency.

Projects that are initiated are often delayed, and sometimes cancelled.

What does this mean for the supply chain?

Growth opportunities are still out there, but they are more fragmented and of lower value than in the past.

This requires a different approach to sales and marketing. We must find ways to reach a wider number of contacts across a wider number of OEMs, without increasing costs.

Structured, systematic ways of approaching the market will be necessary. Sales and marketing must work concurrently as one commercial team, in one single workstream. This requires new skills for sales teams and more budget-efficient, highly targeted approaches from marketing.

This is not a case of tearing everything up and starting again. But it is a time for bold commercial leadership to redefine the skills, tools and, most importantly, processes that will deliver results in difficult market conditions.

Overall, I remain a long-term optimist about off-highway machinery in Europe and the USA. Those who can adapt and navigate these market changes will be rewarded by a market that continues to provide long-term value.