Construction Machinery: Up in Europe and North America, Down in China and APAC

According to Interact Analysis 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 machinery. 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.

BEVs Market Share is Increasing

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.”

Construction: Small Machinery, Huge Impact

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.