In collaboration with Knibb Gormezano & Partners Years International Management & Technology Consultants NON-ROAD MOBILE ENGINE AND AFTERTREATMENT FORECAST PROVIDING THE MOST COMPREHENSIVE INSIGHT AND ANALYSIS OF THE GLOBAL NON-ROAD MOBILE MACHINERY POWERTRAIN SECTOR www.kgpauto.com Issue 2
ABOUT US Knibb, Gormezano and Partners (KGP) provides consultancy services to the automotive and related industries worldwide. Since our foundation in 1988 we have helped over 500 companies worldwide grow and globalise. Our extensive global network is constantly being expanded to meet our customers requirements. SECTORS Light Vehicles (Cars and LCVs) Heavy Commercial Vehicles & Trailers Off-Highway and Industrial Vehicles Tractors and Agricultural Machinery Marine Components Materials Aftermarket ESP s PROJECTS Single Client Multi-Client Special Reports North America Western Europe Central and Eastern Europe Asia Pacific Latin America Rest of World CLIENTS Vehicle Manufacturers Component Suppliers Material Producers Service Providers (OE and Aftermarket) Government Finance Industry Others
Contents Table of Figures... 4 Table of Tables... 6 Disclaimer and Usage Rights... 8 Non-Road Mobile Machinery Forecast Subscription Offer... 8 Acronyms... 9 Introduction... 10 Methodology... 10 Geographic Scope... 9 Time Scope... 9 Market Overviews... 10 Agricultural Machinery Market Outlook... 11 Latin America... 11 China... 11 EU & EFTA... 11 India... 12 Japan... 12 United States and Canada... 12 Central & Eastern Europe... 13 Construction, Quarrying and Mining Market Outlook... 14 Latin America... 14 China... 14 EU & EFTA... 15 India... 15 Japan... 16 United States and Canada... 16 Central & Eastern Europe... 16 Legislative Outlook... 17 Stage V Transitional Engines Impact and Opportunities... 18 Legislation Timing... 19 Legislative Limits... 19 Engine Pre-Buy... 20 OEM Outlook... 23 Production by Region... 26 Page 1
Production by Emissions Compliance Tier... 28 Production by Emissions Solution... 33 Further Reading... 33 Captive vs Non-Captive Engine Sourcing... 36 Top Engine Manufacturers... 39 Further Reading... 40 Production by Segment... 40 Agricultural Equipment Summary... 43 Top OEMs - Agricultural Equipment... 44 Further Reading... 45 Construction Equipment Summary... 47 Further Reading... 50 Top OEMs Construction Equipment... 51 Material Handling Equipment Summary... 53 Top OEMs Materials Handling... 56 Major OEM Engine Ranges... 58 AGCO Engine Ranges... 58 Caterpillar Engine Ranges... 59 Cummins Engine Ranges... 60 Deere Engine Ranges... 60 Deutz Engine Ranges... 61 Doosan Engine Ranges... 61 CNH/FPT Industrial Engine Ranges... 62 Isuzu Engine Range... 62 JCB Engine Range... 63 Kohler Lombardini Engine Range... 63 Komatsu Engine Range... 64 Kubota Engine Range... 64 Liebherr Engine Range... 64 MTU Engine Range... 65 Page 2
Volvo CE & Volvo Penta Engine Range... 65 Yanmar Engine Range... 66 Key Chinese Engine OEMs... 67 FAW Wuxi... 67 Weichai... 67 Yuchai... 68 Financial Overview... 69 Construction Equipment OEMs... 69 Agricultural Equipment OEMs... 72 Materials Handling OEMs... 75 Legislative Summary... 77 European Union Legislation... 77 US Legislation... 77 China Legislation... 78 Japan Legislation... 79 South Korea Legislation... 80 Turkey Legislation... 80 Russian Legislation... 82 Indian Legislation... 82 Contacts... 83 About KGP... 84 Other Reports - Annual Review... 84 About Off-Highway Research... 85 Page 3
Table of Figures Figure 1 Emissions Stages... 19 Figure 2 Stage V Legislative Limits g/kwhr... 19 Figure 3 European Production by Compliance... 20 Figure 4 Increased engine production demand scenario (000s) 2019-2021.. 21 Figure 5 Major OEMs Stage IV DPF Fitment... 22 Figure 1 Production by Region 2013-2023 (000s)... 27 Figure 2 37-560kW NOx and PM Emissions Limits... 28 Figure 3 Legislative Compliance Equivalents... 28 Figure 4 Timing of legislation worldwide... 29 Figure 5 Production by Compliance Tier 2013-2023 (000s)... 32 Figure 6 Engines Regulated to Tier 4i or greater 2013-2023... 32 Figure 7 Production by Emissions Solution 2013-2023 (000s)... 35 Figure 8 Production by Engine Source 2013-2023 (000s)... 37 Figure 9 Global NRMM Installations by Engine OEM 2013-2023 (000s)... 40 Figure 10 Production by Market Segment 2013-2023 (000s)... 42 Table 11 Agricultural Machinery Production by Region 2013-2023 (000s)... 44 Figure 12 Agricultural Machinery Production by Region 2013-2023 (000s)... 44 Figure 13 Agricultural Machinery Production by OEM 2013-2023 (000s)... 47 Figure 14 Construction Equipment Production by Region 2013-2023 (000s). 50 Figure 15 Construction Equipment Production by OEM 2013-2023 (000s)... 52 Figure 16 Materials Handling Production by Region 2013-2023 (000s)... 55 Figure 17 Diesel Materials Handling by OEM 2013-2023 (000s)... 57 Page 4
Figure 18 AGCO Engine Range & Aftertreatment Fitment... 58 Figure 19 Caterpillar Engine Range & Aftertreatment Fitment... 59 Figure 20 Perkins Engine Range & Aftertreatment Fitment... 59 Figure 21 Cummins Engine Range & Aftertreatment Fitment... 60 Figure 22 Deere Engine Range & Aftertreatment Fitment... 60 Figure 23 Deutz Engine Range & Aftertreatment Fitment... 61 Figure 24 Doosan Engine Range & Aftertreatment Fitment... 61 Figure 25 FPT Industrial Engine Range & Aftertreatment Fitment... 62 Figure 26 Isuzu Engine Range & Aftertreatment Fitment... 62 Figure 27 JCB Engine Range & Aftertreatment Fitment... 63 Figure 28 Kohler Lombardini Engine Range & Aftertreatment Fitment... 63 Figure 29 Komatsu Engine Range & Aftertreatment Fitment... 64 Figure 30 Kubota Engine Range & Aftertreatment Fitment... 64 Figure 31 Liebherr Engine Range & Aftertreatment Fitment... 64 Figure 32 MTU Engine Range & Aftertreatment Fitment... 65 Figure 33 Volvo CE Engine Range & Aftertreatment Fitment... 65 Figure 34 Volvo Penta Engine Range & Aftertreatment Fitment... 65 Figure 35 Yanmar Engine Range & Aftertreatment Fitment... 66 Figure 36 European Union Emissions Legislation Timing and Limits... 77 Figure 37 US Emissions Legislation Timing and Limits... 77 Figure 38 China Emissions Legislation Timing and Limits... 78 Figure 39: Japanese Emissions Legislation Timings and Limits... 79 Figure 40 South Koran Emissions Legislation Timing and Limits... 80 Page 5
Figure 41: Turkey Emissions Legislation Timings and Limits... 80 Figure 42 Brazil Emissions Legislation Timing and Limits... 81 Figure 43: Russia Emissions Legislation Timings and Limits... 82 Figure 44: India Emissions Legislation Timings and Limits... 82 Table of Tables Table 1 Geographic Scope... 9 Table 2 Short and Medium Term Market Outlook... 10 Table 3 Short and Medium Term Emissions Legislation Assumptions... 17 Table 4 OEM Outlook... 23 Table 5 Production by Region 2013-2023 (000s)... 26 Table 6 Production by Compliance 2013-2023 (000s)... 30 Table 7: Brazilian Proconve Mar-1 Legislation Implementation Timings... 31 Table 8 Emissions Solutions Assumptions... 33 Table 9 Production by Emissions Solution 2013-2023 (000s)... 34 Table 10: NRMM Engine Market Non-Captive Engine Share by Region... 36 Table 11 NRMM Captive vs Non-Captive Engine Sourcing 2012-2022 (000s) 36 Table 12: Major OEMs Engine Sourcing Outlook - Captive vs Non Captive... 38 Table 13 Global NRMM Production by Engine OEM 2013-2023 (000s)... 39 Table 14 Top Drivers by Segment... 41 Table 15 Production by Segment 2013-2023 (000s)... 41 Table 16 Agricultural Machinery Production by Type 2013-2023 (000s)... 43 Table 17 Agricultural Machinery Production Top OEMs 2013-2023 (000s)... 46 Page 6
Table 18 Construction Equipment Production by Product 2013-2023 (000s). 49 Table 19 Construction Equipment Production by Region 2013-2023 (000s).. 49 Table 20 Construction Equipment Production by OEM 2013-2023 (000s)... 51 Table 21 Diesel Materials Handling Production by Product 2013-2023 (000s)... 54 Table 22 Diesel Materials Handling Production by Region 2013-2023 (000s) 54 Table 23 Top Material Handling OEMs 2013-2023 (000s)... 56 Table 24FAW Wuxi Engine Range and Aftertreatment Fitment... 67 Table 25: Weichai Engine Range and Aftertreatment Fitment... 67 Table 26: Yuchai Engine Range and Aftertreatment Fitment... 68 Table 27: Top Construction Equipment OEMs Quarterly Revenue 2017... 69 Table 28: Top Agricultural Machinery OEMs Quarterly Revenue 2017... 73 Table 29: Top Materials Handling OEM Quarterly Revenue 2017... 75 Page 7
Disclaimer and Usage Rights Information contained in this document has been obtained by Knibb, Gormezano & Partners from industry sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Knibb Gormezano does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. This report is licensed for internal use only and should not be transmitted to 3rd parties without permission of Knibb Gormezano and Partners. Non-Road Mobile Machinery Forecast Subscription Offer Purchasers of this report are entitled to a discounted extract of KGP s database within three (3) months of purchase, also available via our online-shop. The full database service costs 11250 for a single user download, with a quarterly summary report. A full subscription of 4 quarterly database deliveries, quarterly summary reports and the annual review is 22500 Page 8
Acronyms AG Agricultural Machinery ASC Ammonia Slip Catalyst (Clean-Up-Catalyst) CE Construction Equipment DOC Diesel Oxidation Catalyst DPF Diesel Particulate Filter EGR Exhaust Gas Recirculation FIE - Fuel Injection Equipment MH - Materials Handling NRMM Non-Road Mobile Machinery (Off-highway Equipment) SCR Selective Catalytic Reduction Page 9
Most importantly to the industry the Particulate Number limit, aimed at further reducing small particulates that have been proven to be harmful to health. When Stage IV was originally written it was considered that DPF would be required for all engines, but developments in combustion control meant that many European OEMs avoided fitment, citing various concerns over fuel economy, maintenance and durability. However DPF will now need to be fitted to all diesel engined equipment. Engine Pre-Buy For those OEMs with DPFs already, for example Caterpillar and John Deere, the engine and machine requirements will be minimal, however for those without, i.e. AGCO, CNH and JCB, engine changes will be mandatory, and in many cases will require machine changes. Whilst engine production is closely synced to equipment production new emissions stages often drive distortions. Under the previous rules OEMs were able to use a so called Flexibility scheme which allowed them to sell up to 40% of the previous five years sales volumes to previous emissions limits. Transition allows a lot shorter period for use of engines in new machines. Based on KGP s research and assumptions a scenario for production can be estimated, note that this is a preliminary estimate and volumes may increase/decrease depending on customer demand. Figure 3 European Production by Compliance 600 500 400 300 200 100 Production by Compliance Estimates (000s) - '16 '17 '18 '19 '20 '21 '22 <= IIIA IIIB IV V KGP s initial estimates suggest 120,000 machines <56kW and >130kW will be built with Stage IV transition engines plus 10,000 at Stage IIIB, in 2019, Page 20
7. Brazil is the only country in Latin America that has NRMM legislation, Argentina and Chile both using and producing machinery Tier 2 or lower. Brazilian legislation was introduced in 2011, called Proconve Mar-1 and will begin enforcement in 2015, it is equivalent to Tier 3 legislation. 8. Proconve Mar-1 is a tiered approach, with construction equipment and agricultural machinery having different enforcement timings, as well as power ratings having an effect on enforcement timing. The table below outlines differences between the two sectors. Table 7: Brazilian Proconve Mar-1 Legislation Implementation Timings Source: Diesel Net 9. Russia was supposed to implement Tier 3 equivalent legislation for agricultural machinery in 2014, however this was put back to 2017. However, again legislative enforcement has failed to materialise this year either. They have now postponed this legislation again. 10. Tier 4i production continues to grow as the developing markets shift some of their Tier 3 production to high regulations, some of the nonregulated markets will pick up some Tier 3 production towards the end of the forecast period. 11. Tier 4 production starts to tail off 2020 onwards as Stage V is introduced in Europe. It was expected that this would be followed closely by Tier 5 being introduced in North America, but this seems unlikely with the current EPA budget cuts. Page 31
5. India Traditionally a relatively weak market for dedicated construction equipment, much of the equipment bought in India can cross-over to agriculture, backhoe loader, midi excavators, telehandlers. Economic growth very strong, and the new government is investing substantially, 2017 is expected to be up around 8% on 2016. Figure 19 Construction Equipment Production by Region 2013-2023 (000s) US & Canada Latin America 2013 Asia Pacific Other C & E Europe Latin America US & Canada 2016 Asia Pacific Other C & E Europe China Latin America US & Canada 2023 Asia Pacific C & E Other Europe China Japan China Japan Japan India EU & EFTA India EU & EFTA India EU & EFTA Source: KGP Non-Road Mobile Machinery Q2 2017 Engine Forecast Further Reading KGP is currently researching driveline trends in the Non-Road mobile machinery market, including supply chain and fuel efficiency developments. A focus will include trends for hybridisation and electrification below 56kW. For further information contact Mick Beeson mickbeeson@kgpauto.com Page 50
Isuzu's engines are widely used in construction applications, notably excavators, where it supplies several manufacturers. It also supplies into the Material Handling segment, particuarly to Chinese OEMs for export. JCB Engine Range Figure 32 JCB Engine Range & Aftertreatment Fitment JCB Engine Range Tier 4 Interim/Stage IIIB Tier 4 Final/Stage IV Stage V Model Displacement Power (kw) Torque (Nm) SCR EGR DOC DPF Model Displacement Power (kw) Torque (Nm) SCR EGR DOC DPF Model Displacement SCR EGR DOC DPF 444 4.4 55 375 - - - 430 3 37-55 TBA - - - 430 3-448 4.8 110-130 550-750 - - - 444 4.4 55-75 TBA - - 444 4.4 672* 6.7 TBA TBA - - - 448 4.8 110-130 550-750 - - 448 4.8 672 7.2 Source: KGP Analysis JCB's in-house engine production started in 2004. Its engine range is limited, but is being expanded with the expected 430 3.0l. The new 6 cylinder is currently limited to lesser regulated markets, but we expect this to change for Stage V. Early in 2017 JCB launched the long awaited 430 engine which will replace Isuzu engines in various applications. Kohler Lombardini Engine Range Figure 33 Kohler Lombardini Engine Range & Aftertreatment Fitment Kohler Lombardini Engine Range Applications: Agriculture, Construction Equipment Tier 4 Interim/Stage IIIB Model Displacement Power (kw) Torque (Nm) SCR EGR DOC DPF Tier 4 Final/Stage IV Tier 4 Final LDW 702* 0.7 6-13 29-39 - - - - Model Displacement Power (kw) Torque (Nm) SCR EGR DOC DPF* Model Displacement SCR EGR DOC DPF* 12 LD 447-2* 1.0 17-19 52-64 - - - - KDI1903 1.9 18-42 98-225 - - KDI1903TCR 1.9 - LDW 1003 1.0 8-18 48-80 - - - KDI2504 2.5 29-55 156-300 - - KDI2504TCR 2.5-9 LD 625-2* 1.2 17-18 53-68 - - - KDI3404 3.4 55 294-375 - KDI3404TCR 3.4 LDW 1404 1.4 19-26 66-80 - - - LDW 1603 1.6 24-29 94-104 - - - LDW 2204 2.2 22-37 119-167 - - - LDW 2204 T 2.2 47.7 119-167 - - - Source: KGP Analysis Kohler Lombardini has developed several new engines for Tier 4i and 4 Final since Kohler acquired it in 2007. Like other compact engine producers, Kohler has no DPF for Stage IV/Tier 4, although they must adopt it for Stage V. Lombardini has an alliance with JCB to provide the latter with small engines for its compact equipment, replacing Isuzu and Perkins' engines. Our assumption for Stage V is that Lombardini will add a DPF to its Tier 4 range, as the engines are a modern design. Page 63
Japan Legislation Figure 44: Japanese Emissions Legislation Timings and Limits Japan 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 <8KW 8-19kW 19-37kW MLIT 1 MLIT 2 MLTI 3 37-56kW MLIT 1 MLIT 2 MLIT 3 56-75kW MLIT 1 MLIT 2 MLIT 3 MLIT 4 75-130kW MLIT 1 MLIT 2 MLIT 3 MLIT 4 130-560kW MLIT 1 MLIT 2 MLIT 3 MLIT 4 >560kW Table 1 g/kwh/% Power (P) kw New Models All Models CO HC NOx PM Smoke % 19 P < 37 2007.10 2008.09 5.0 1.0 6.0 0.40 40 37 P < 56 2008.10 2009.09 5.0 0.7 4.0 0.30 35 56 P < 75 2008.10 2010.09 5.0 0.7 4.0 0.25 30 75 P < 130 2007.10 2008.09 5.0 0.4 3.6 0.20 25 130 P < 560 2006.10 2008.09 3.5 0.4 3.6 0.17 25 Power (P) kw New Models All Models CO HC NOx PM Smoke 19 P < 37 2013.10 2015.09 5.0 0.7 4 0.03 25 37 P < 56 2013.10 2014.11 5.0 0.7 4 0.025 25 * Proposed. 56 P < 75 2012.10 2014.04 5.0 0.19 3.3 0.02 25 56 P < 75 2016* - 5.0 0.19 0.4 0.02 25 75 P < 130 2012.10 2013.11 5.0 0.19 3.3 0.02 25 130 P < 560 2011.10 2013.04 3.5 0.19 3.3 0.02 25 75 P < 130 2016* - 5.0 0.19 0.4 0.02 25 130 P < 560 2015* - 3.5 0.19 0.4 0.02 25 Page 79
Contacts Knibb, Gormezano and Partners Contacts: Page 83
About KGP KGP is a global Automotive consultancy, founded in 1988. Contact us for global specialist automotive and related industry expertise including: 1. Market Intelligence 2. Technology Analysis 3. Non-Road Mobile Machinery 4. Commercial Vehicles 5. Light Vehicles 6. Electric and Hybrid Powertrains Clients include many global OEMs, Tier One, Two, Three and other suppliers, as well as other industry stakeholders. Other Reports - Annual Review In addition to the Global Quarterly Executive Summary (this document), KGP also provides an annual review covering each of the regions listed in the Geographic Scope, as well as Mini Profiles of each of the major Global OEMs. Page 84
About Off-Highway Research WORLD-CLASS CONSTRUCTION EQUIPMENT MARKET RESEARCH AND ANALYSIS FROM AROUND THE GLOBE Off-Highway Research is a management consultancy specialising in the research and analysis of international construction, and agricultural equipment markets, and is the largest of its kind in the world. The consultancy was formed in 1981 as part of The Economist Intelligence Unit (EIU) and is now privately owned. Off-Highway Research offers a unique level of international research expertise to the construction, earthmoving, mining, industrial and agricultural equipment industries. This specialist capability, offered by offices in the UK, China, India, the USA and Japan is available through a combination of Subscription Services and Private Client Research. The company is staffed by industry specialists with a wide range of industry, language and consultancy skills, and is supported by a unique database of information. Over the last five years, Off-Highway Research has worked for over 600 clients in 37 countries. Regional services covering Europe, India and China Regional Databases: North America, Europe, Japan, China and India The Volume and Value Service Multi-Client Studies Private Client Research The company offers a range of world-class services including: Regional services covering Europe, India and China Regional Database Services The Volume and Value Service Multi-Client Studies Private Client Research i Additional Supplementing Legislation (EU) 2017/654, 655 and 656 cover technical and general requirements, monitoring and administrative requirements respectively. Page 85
t: +44 (0) 1332 856301 f: +44 (0) 1332 856302 e: consult@kgpauto.com w: www.kgpauto.com Ground Floor, 6 Lancaster Park, Needwood, Burton on Trent, Staffs DE13 9PD, UK