Construction equipment emerges from down cycle and enters period of growth
- The off-highway vehicle market is forecast to reach 7.8M units by 2030.
- Battery electric vehicles are highly concentrated in material handling applications
- The construction sector in North America and EMEA is projected to experience strong growth in 2027
London, 26th August 2026 – The global off-highway vehicle market is emerging from a 2024-2025 cyclical trough into a decade of steady growth, according to Interact Analysis. The latest Off-Highway Vehicles report from the market intelligence specialist indicates the market grew from 5.8 million units in 2024 to 6 million units in 2025. It is forecast to reach 7.8 million by 2030, representing an average annual growth rate of 5.3%. This is primarily driven by the agricultural and material handling sectors, which are projected to account for a combined 83% of all off-highway vehicle units by 2035.
Construction vehicle production increases in Europe and North America, as China and APAC falter
Following a slump in 2025 and projected moderate growth in 2026, the construction market in the North American and Europe, the Middle East and Africa (EMEA) regions is expected to experience strong growth in 2027, achieving a production growth rate of 13% and 9% respectively. In contrast, the Asia-Pacific region (APAC) is projected to see a contraction in production levels of construction vehicles. China’s construction vehicles industry is expected to shrink by approximately 9%, while the rest of APAC is expected to contract by 3%. Despite the fall in production in 2027, the rest of APAC is still expected to marginally grow out to 2030, expanding from 352,000 units in 2026 to 362,000 units in 2030. However, China is not expected to recover from this contraction in the forecast period, with units falling from a projected 474,000 in 2026 to 455,000 in 2030. This is primarily due to weak private sector investment as a result of policy uncertainty, as well as a slowdown in manufacturing growth inhibiting demand for construction vehicles.
Battery electric vehicles continue to gain market share
The market share of battery electric vehicles (BEVs) is projected to rise over the next decade, from 33% of units in 2025 to 44% in 2035, while the share of the market accounted for by internal combustion engines (ICE) is forecast to fall from 66% to 55% over the same period. Electrification is highly concentrated in the material handling sector, with 94% of BEV off-highway units designed for material handling use cases, and projected BEV penetration into the material handling sector of approximately 83% by 2030. Applications that require indoor, low-duty operation with predictable cycles are well suited to battery technology.
Chloe Mason, Market Analyst at Interact Analysis, says, “BEV’s relevance is bimodal and concentrated overwhelmingly in material handling at present. Our research indicates the only currently meaningful growth frontiers are compact urban construction in the West and large machines in China. Agriculture, road building, dozers, and forestry are structural diesel markets for the duration of our forecast.”
Small machines continue to dominate in off-highway equipment
The off-highway market is overwhelmingly dominated by small machines; 43% of units fall into the sub-18 kW category and 63% fall into the sub-35 kW category. This has direct consequences for engine displacement demand, component sizing, and the addressable electrification market. Small power dominance is driven by machine type; 72% of lift trucks fall within the sub-18 kW range and lift trucks have the largest market share of any vehicle type. As the Interact Analysis Off-Highway Vehicles report notes, there is potential for a higher rate of electrification later in the decade within the 36-100 kW segment, while the transition toward electric vehicles in the 100+ kW segment is a more strategically interesting and higher margin frontier.
About the Report:
The off-highway equipment market is evolving fast, and our research helps you stay ahead of the trends. Our Off-Highway Vehicles report delivers detailed insight and analysis into the industry.
In addition to providing market size and forecast data, the report also answers questions such as:
- What was the size of the global market, and how will this change?
- What is the status of electrification in the market?
- What is the penetration rate of different powertrain types within the off-highway vehicle market?
and more.
About Interact Analysis
With over 200 years of combined experience, Interact Analysis is the market intelligence authority for global supply chain automation. Our research covers the entire automation value chain – from the technology used to automate factory production, through inventory storage and distribution channels, to the transportation of the finished goods. The world’s leading companies trust us to surface robust insights and opportunities for technology-driven growth. To learn more, visit www.InteractAnalysis.com.
