Yanmar Holdings and Hitachi Construction Machinery said they have signed a letter of intent July 23, 2026, to explore possible collaboration in the compact equipment business.

The companies said the construction equipment industry is facing more diverse customer requirements, faster technological change and intensifying global competition. In the compact segment, they believe closer cooperation between full-line manufacturers and specialist producers may be needed to sustain growth and competitiveness.

The discussions will examine how Yanmar Compact Equipment’s expertise in mini and midi excavators, wheel loaders, compact track loaders and tracked carriers could be combined with Hitachi Construction Machinery’s global construction and mining equipment business. The objective is to strengthen product competitiveness and deliver greater value to customers.

Both companies intend to retain their individual brand identities and continue operating separate dealer networks. Yanmar is seeking to optimize its product lineup and strengthen aftermarket support, while Hitachi Construction Machinery is using external partnerships to broaden the range of products and solutions available to its dealers and customers.

Source: Hitachi Construction Machinery

PSR Analysis. At this stage, the agreement is not an integration plan. It is a way for the two companies to look for areas where cooperation could improve their position without giving up their brands or dealer relationships. That approach makes sense in compact equipment, where manufacturers must support a wide product range while also investing in electrification, operator assistance, connectivity and market-specific configurations.

Because the dealer networks will remain separate, the initial value is unlikely to come from channel consolidation. More meaningful gains could emerge behind the sales organization through product cross-sourcing, common platforms and components, shared development work or a clearer division of production responsibilities. These measures could reduce overlapping investment and allow both companies to fill gaps in their product ranges more quickly.

No decision has yet been made on joint development, OEM supply or the use of common powertrains and engines. The next indication of the partnership’s direction will therefore come from changes to the two companies’ product portfolios, manufacturing roles and component sourcing. The market impact will depend on whether the LOI develops into a practical product and production strategy. PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia

The systems will use HD Hyundai Heavy Industries’ 9.6 MW-class HiMSEN medium-speed engines and provide a combined generating capacity of 1,000 MW. The equipment will supply power to data centers operated by a major U.S. technology company.

HD Hyundai said the HiMSEN engine combines high output and generating efficiency with the reliability required for continuous 24-hour operation. The latest contract follows a USD $425 million agreement signed with U.S. energy infrastructure developer AEG in April, also covering power generation equipment for data centers.

The wider HD Hyundai Group is building a broader position in this market. HD Hyundai Heavy Industries supplies engine-based generating systems, while HD Hyundai Electric is expanding its power distribution and electrical equipment business. HD Hyundai Marine Solution is also developing maintenance services for power generation engines.

Source: PR Newswire

PSR Analysis. The significance of this contract goes beyond its size. Technology developed for marine propulsion and onboard power generation is moving into the land-based data center market at utility scale. With a combined capacity of 1,000 MW, the project is far larger than conventional building-level standby generation and shows that engine-based power is becoming part of the core infrastructure behind major digital facilities.

In markets where data center construction is moving faster than grid expansion, operators need power capacity that can be installed in stages and kept available while individual units undergo maintenance. A plant built around multiple medium-speed engines can offer flexibility and redundancy. The April and August contracts also suggest that this is developing into a repeat market for HD Hyundai rather than a single project.

Continued growth could create a new challenge for engine manufacturers. Production capacity and service resources will have to be divided between marine customers and large land-based power projects. HD Hyundai is well placed because the group can combine engines, electrical equipment and long-term maintenance, allowing it to capture revenue beyond the initial equipment sale. However, the fuel specification, number of engines, delivery schedule and actual operating profile have not been disclosed. Those details will be needed to judge the project’s generating cost and emissions performance.  PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia

In the Malaysian states of Sabah and Sarawak, the price of unsubsidized diesel has risen by almost 120%. The two states accounted for 43.9% of Malaysia’s 20.28 million tons of crude palm oil production in 2025. Subsidized diesel is available at US 51 cents (MYR 2.10) per liter, but the monthly allocation is capped at 200 liters, well below the 500 liters or more that farmers say they need.

Higher fuel costs have forced some farmers to reduce their harvesting frequency from around 2.5 rounds per month to between one and 1.5 rounds. The added burden includes not only transport costs but also the expense of operating generators and other machinery. Industry representatives warned that Sarawak’s yields could fall by 15–20% if the situation continues.

In Indonesia, diesel shortages since mid-July have restricted operations in Sumatra, which accounts for 55% of the country’s palm oil output. Vehicles and equipment used on the plantations depend on diesel, and harvesting intervals have lengthened from the usual eight to ten days to between eight and twelve days.

Source: Reuters

PSR Analysis. Palm oil is produced by pressing fresh fruit bunches harvested from oil palm trees. Its uses extend well beyond bottled cooking oil. It is found in margarine, confectionery, baked and processed foods, while palm-based ingredients are also used in soap, detergent, cosmetics, industrial products and biodiesel.

Lower output in Malaysia and Indonesia can therefore affect a wide range of consumer and industrial supply chains.

Once a fruit bunch is cut, it must be collected from the plantation, moved to a loading point and transported by truck to a mill. The bunches deteriorate quickly and normally need to be processed within 24 hours. The role of diesel in this process is direct: it powers plantation transport vehicles, trucks, agricultural equipment and, in some remote operations, generators.

In eastern Malaysia, the problem is the cost of diesel. In Sumatra, it is the availability of diesel. Neither problem directly affects the growth of the oil palm trees. Instead, it reduces how often farmers can harvest, collect and transport the fruit, leaving less feedstock available for the mills.

The effect on equipment demand is mixed. More expensive diesel makes fuel-efficient machinery more attractive, but it also weakens smallholders’ cash flow and their ability to invest. Many operators may keep older machines in service longer, supporting parts and repair activity while delaying new equipment purchases.

Electrification is not an immediate answer in remote plantation areas where grid supply and charging infrastructure remain limited. For the foreseeable future, fuel efficiency, durability, ease of maintenance and fuel monitoring will carry more weight in purchasing decisions.  PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia

IHI Power Systems in July began operating a demonstration plant using a 6,000kW ammonia-fueled reciprocating engine at its Ota Plant in Gunma Prefecture. The engine uses ammonia and heavy fuel oil in a dual-fuel configuration and can also operate entirely on heavy fuel oil. The company is targeting both an ammonia fuel ratio and a greenhouse gas emissions reduction of more than 90%.

The demonstration will evaluate the complete power generation system, including engine performance, fuel supply equipment, exhaust aftertreatment, leak detection and safety controls. Fuel handling and exhaust treatment are particularly important because ammonia is toxic and can produce unburned ammonia and nitrous oxide under certain combustion conditions. IHI Power Systems plans to complete the testing during fiscal 2026 and begin commercial sales in fiscal 2027.

The 6 MW unit is based on the 1.6 MW 28ADF ammonia-fueled engine developed for coastal vessels and has been scaled up to a V18 configuration for stationary power applications. It also incorporates power generation control technology developed for auxiliary marine engines.

IHI Power Systems is targeting industrial power generation, remote islands, data centers, mines and industrial parks. The system will be marketed as an option for replacing or upgrading existing diesel and heavy-fuel-oil generating equipment.

Source: IHI

PSR Analysis: The significance of this announcement is that ammonia engine technology developed for marine applications is now being extended into the land-based stationary power market. Rather than developing an entirely new engine platform, IHI Power Systems is scaling up a 1.6 MW engine that already has operating experience on a commercial vessel. This should allow the company to apply its existing knowledge of combustion control, fuel supply, exhaust treatment and ammonia safety to the land-based system.

The initial product will use a dual fuel configuration rather than operating exclusively on ammonia. The ability to switch to heavy fuel oil means that power generation can continue if ammonia is unavailable or if a problem occurs with the ammonia-related equipment.

For mines, remote islands, industrial parks and data centers, where continuity of power supply is essential, fuel flexibility is likely to be an important consideration when evaluating the system.

Commercialization will involve more than the engine itself. An ammonia-based generating plant also requires fuel storage and supply equipment, leak detection, ventilation, safety controls and exhaust aftertreatment. Because ammonia is toxic and corrosive, additional specifications will also be required for piping, seals, valves and other fuel-handling components. The development of ammonia power generation could therefore create demand for engine manufacturers, and for suppliers of auxiliary equipment, control systems, exhaust treatment and fuel-handling equipment.

The commercial outlook will depend heavily on the price and availability of ammonia. Even if the engine performs as planned, the addressable market will remain limited if the cost of the fuel, storage equipment and safety systems is substantially higher than that of conventional diesel generation. Initial demand is therefore more likely to come from large industrial users that operate generating equipment for long periods, consume significant volumes of fuel and have both the financial capacity and a clear reason to invest in lower-carbon alternatives.

IHI Power Systems’ plan to begin commercial sales in fiscal 2027 indicates that ammonia-fueled reciprocating engines are moving beyond the research stage toward a defined product offering. The next points to watch will be continuous operating performance, maintenance intervals, the durability of the exhaust aftertreatment system, and the location and fuel supply arrangements of the first commercial installation. PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia for Power Systems Research

Samsung Electronics and SK Hynix are expected to invest a combined $541.03 billion USD (KRW 800 trillion) in new semiconductor capacity in southwestern South Korea. Samsung has selected Gwangju as a candidate location for a new production base, while SK Hynix is also considering an additional site in the region. A separate advanced semiconductor packaging cluster, involving approximately $54.78 billion USD (KRW 81 trillion) in investment, is planned for the Chungcheong region.

South Korean companies, including SK Group, GS Group and Naver, are also planning major investments in AI data centers. Initial projects are expected to total around $371.96 billion USD (KRW 550 trillion) and provide 8.4 GW of capacity. Construction is scheduled to begin by the first half of 2028, and cumulative investment could exceed $676.28 billion USD (KRW 1,000 trillion) by around 2035.

The physical AI program aims to make South Korea a leading producer of industrial and humanoid robots by 2030. The government plans to support the development of robots for ten major industries, with initial commercial applications targeted for 2028. The program also includes industrial data collection facilities, a domestic physical AI foundation model and training programs for engineers and researchers.

A robotics and component manufacturing cluster is planned for the Saemangeum area on the west coast. The government intends to combine robot production, component supply, AI development and industrial testing within the same regional base.

Source: Reuters

PSR Analysis: The plan is notable because South Korea is not treating AI as a software or semiconductor issue alone. It combines chip production, data centers, power and cooling infrastructure, robotics, component manufacturing and workforce development. The objective is to turn rising demand for AI computing into a broader cycle of domestic manufacturing investment.

The scale of the program will create substantial demand for industrial equipment before physical AI has a major direct effect on machinery markets. Semiconductor plants and data centers require construction equipment, standby and distributed power systems, cooling equipment, material-handling systems, uninterruptible power supplies and electrical control equipment. These investments are likely to generate measurable equipment demand earlier than the planned deployment of humanoid robots.

The decision to place new facilities outside the main semiconductor centers also reflects capacity constraints in existing industrial areas. Large semiconductor and data center projects require reliable electricity, water, logistics infrastructure and skilled labor, as well as access to equipment and material suppliers. Building an equivalent industrial base in new regions will take time, even with strong government support.

The physical AI component is more uncertain. Developing robot platforms and AI models is only one part of commercialization. Industrial users will also require reliable hardware, application-specific engineering, safety systems, maintenance networks and evidence that the equipment can reduce operating costs. Early adoption is therefore more likely in structured manufacturing and logistics environments than in applications requiring highly flexible human-like operation.

The main near-term impact of the strategy will come from the construction of semiconductors and data center capacity. Physical AI may become more important over the longer term, but its development will depend on whether South Korea can connect its strength in semiconductors and electronics with competitive robot hardware, components and practical industrial applications. PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research

Thailand’s Board of Investment in July approved a THB 7 billion, approximately USD 210 million, investment by AutoAlliance Thailand (AAT). The joint venture between Mazda Motor and Ford Motor will upgrade its existing production facilities, mainly for Mazda vehicles, in preparation for a B-segment SUV using mild hybrid electric vehicle technology.

The investment will introduce additional automation and robotic equipment in chassis welding, body assembly, painting and final assembly. The upgrades are intended to improve production efficiency and accuracy while allowing the plant to handle the additional components and manufacturing requirements of the new MHEV model.

Mazda announced a broader investment plan in February 2025 to develop Thailand as a production base for electrified compact SUVs. The company said the vehicles would be supplied to the Thai market and exported to Japan and other ASEAN countries, with annual production targeted at 100,000 units.

Mazda currently operates the AutoAlliance vehicle plant in Rayong and Mazda Powertrain Manufacturing Thailand in Chonburi. The latter produces engines and automatic transmissions. The company’s investment plan also covers powertrain and battery-related production, although the configuration of the MHEV system, the detailed configuration of the MHEV system has not been disclosed. But Mazda has previously indicated that production will begin in 2027, with annual capacity of 100,000 units and a local content target of more than 70%.

Thailand continues to support several types of electrified vehicles rather than focusing only on battery-electric models. The country has attracted investment in BEV, HEV and related component production, while retaining a large existing supply base for engines, transmissions and other conventional vehicle components.

Sources: Reuters / Thailand Board of Investment

PSR Analysis: The investment shows that Thailand’s automotive strategy is not based on a single powertrain technology. The country is developing production capacity for ICE, MHEV, HEV, PHEV and BEV models at the same time. This is relevant in Southeast Asia, where income levels, fuel prices, electricity supply, charging infrastructure and vehicle usage vary considerably between markets.

MHEVs continue to use an internal combustion engine as the main source of power, allowing manufacturers to retain much of the existing engine, transmission, fuel and exhaust supply chain. At the same time, the vehicles require batteries, starter-generators, inverters and additional power-control components. This provides a route for existing Thai suppliers to add new products without requiring an immediate replacement of their existing manufacturing capabilities.

The focus on upgrading an existing plant is also important. Auto Alliance is investing in welding, body, paint and assembly automation rather than building an entirely new factory. This reflects the need for Thai vehicle production to compete through quality, accuracy, utilization and manufacturing flexibility, rather than labor cost alone.

Japanese and Chinese manufacturers are taking different approaches in Thailand. Chinese investment has concentrated heavily on new BEV capacity, while Japanese manufacturers are making greater use of existing plants, local suppliers, export networks and powertrain production. Both groups are likely to compete for the Thai market and for exports, but with different product and manufacturing strategies.

The main point to watch will be the local sourcing of the MHEV system. If batteries, starter-generators and power electronics continue to be imported, much of the additional value will remain outside Thailand. If production of these components is localized, the Auto Alliance investment could support a broader upgrading of the country’s automotive supply chain. PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research

Hitachi Construction Machinery announced that a joint demonstration test will begin with Fukudome Kaihatsu in Tosa, Kochi Prefecture, using a ZX200A-7 20-ton class hydraulic excavator and a real-time digital twin platform. The test will be conducted in  June 2026 at a river dredging project site in the Niyodo River Mochiishi District.

The platform integrates 3D terrain data, camera images, construction machinery, vehicles, and worker location information in real time, and reproduces the worksite in a virtual 3D space. The demonstration will compare remote operation under direct visual observation, remote operation using camera images, and remote operation using the real-time digital twin platform, in order to verify its effect on safety and productivity.

A related example can be seen in agricultural machinery, where NTT, Kubota, and NTT DOCOMO demonstrated communication technologies for the remote operation and monitoring of robotic agricultural machinery in mountainous areas. The demonstration combined mobile and satellite communications with video control technology to support stable remote operation under fluctuating communication conditions.

Source: Hitachi Construction Machinery / NTT, Kubota and NTT DOCOMO

PSR Analysis: The significance of this announcement is not simply that Japanese construction machinery is becoming more digital. The more important point is that Japan’s off-highway sector is beginning to show a practical path for dealing with one of its most serious structural constraints: the shrinking supply of skilled operators.

In Japan, the discussion around construction machinery and agricultural machinery often turns quickly to electrification or autonomy. Both are important long-term themes, but they are not necessarily the first areas where the market will see broad practical adoption. On many construction sites, especially in civil engineering, disaster recovery, and regional public works, the immediate problem is not how to replace the diesel engine. It is how to keep work moving when experienced operators are becoming harder to secure, and when safety requirements are rising.

That is why remote construction using digital twin technology deserves attention. Full autonomy remains difficult in construction because the work environment is highly variable. Ground conditions change, surrounding objects move, work procedures differ by site, and judgment often depends on the operator’s understanding of the whole worksite. A digital twin platform does not remove the operator from the process. Instead, it gives the operator and site manager a better view of the jobsite and supports better decision-making from a remote location.

This distinction matters. Remote operation and worksite visualization can be introduced as an extension of existing hydraulic excavators and construction workflows. They do not require an immediate shift to a completely new machine architecture. For users, that makes adoption more realistic. For OEMs and suppliers, it means that competitiveness will increasingly depend on how well machines can be integrated into connected worksite systems, not only on conventional measures such as power, durability, fuel efficiency, or hydraulic performance.

The agricultural machinery case points to the same issue from another direction. Robot tractors and other automated machines cannot operate safely at scale without stable communications, reliable video transmission, and remote monitoring. In mountainous areas, where communication quality can fluctuate sharply, the machine itself is only one part of the solution. The broader system — communications, software, sensors, video control, and supervision — becomes just as important as the vehicle.

For the Japanese off-highway market, this suggests that “labor-saving” may become a more immediate commercial driver than electrification. Diesel-powered machines are likely to remain in use for many applications, but they will be expected to operate within increasingly digital and remotely managed environments. The future competitive question may therefore shift from “who builds the best machine?” to “whose machine fits best into a safer, more productive, and more remotely managed worksite?”

This is a meaningful direction for Japan. It plays to the country’s strengths in machinery, field engineering, telecommunications, and incremental system integration. It also addresses a problem that is already visible in the market: not a shortage of machines, but a shortage of people who can operate them efficiently and safely. PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research

The company also secured a KRW 27 billion contract to supply 50 15-ton DEVELON bulldozers to the Polish military. This is the company’s first major military procurement order in Europe.

In addition, HD Construction Equipment signed an MOU with the Mykolaiv regional government in Ukraine to cooperate on reconstruction projects. The scope of cooperation includes not only construction equipment supply, but also training, financing, and energy infrastructure recovery.

Source: HD Construction Equipment / HD Hyundai / HD Construction Equipment

PSR Analysis: These announcements should not be read simply as a series of export wins. The more important point is that HD Construction Equipment is expanding into overseas markets where construction machinery is closely linked to infrastructure, defense, mining, and reconstruction.

The ADT order in Norway is a clear example. Articulated dump trucks are not general-purpose machines. They are used in demanding off-highway applications such as quarries, tunnels, soft ground, and rough terrain. Being selected by a major Northern European rental company suggests that Korean construction equipment is being evaluated not only on price, but also on uptime, durability, service support, residual value, and suitability for professional heavy-duty work. This indicates that Korean machines are moving into markets with higher operating requirements, rather than remaining only a lower-cost alternative.

The bulldozer contract with the Polish military should be viewed in the same context. Since the war in Ukraine, Europe has been strengthening both defense capability and infrastructure resilience. Bulldozers and excavators are not combat equipment, but they are essential for military infrastructure, mobility support, and emergency recovery. Construction machinery is therefore becoming more clearly connected to defense and public procurement.

The Ukraine reconstruction MOU has a longer-term significance. In reconstruction markets, selling machines alone is not enough. Suppliers need to support operator training, maintenance, financing, and local implementation. HD Construction Equipment appears to be positioning itself not just as a machinery supplier, but as a partner in the reconstruction process.

This is a natural direction for Korea’s construction equipment industry. The domestic market alone is too limited to support the next stage of growth, so Korean manufacturers need to target overseas markets where their machines can win in specific applications. Northern European rental fleets, Eastern European military and public procurement, and Ukraine reconstruction are all logical targets.

For powertrain and component suppliers, the implications are also important. In high-load applications such as ADTs, bulldozers, and large excavators, electrification will advance in selected areas, but diesel engines, hydraulic systems, transmissions, durability, and service networks will remain central to competitiveness for some time. Korea’s recent export moves show that demand for heavy-duty off-highway machinery is likely to remain solid, supported by infrastructure, defense, and reconstruction needs. PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research

Ten Thai automotive and auto parts associations have warned that EV adoption is putting pressure on domestic production and that the country’s automotive industry could face a crisis. According to the industry groups, Thai manufacturers are struggling to compete with low-cost, zero-tariff EV imports from China, while local parts suppliers are seeing orders decline.

The associations, which represent more than 1,500 member companies, said in a letter to the government that the industry could face a major shock in 2027, when the current incentive scheme designed to support EV production is scheduled to end. They called on the government to review the EV policy before the incentives expire and to introduce urgent measures to support the industry.

Their proposals include tax reforms to favor EVs produced in Thailand, linking import quotas with domestic production and technology transfer, strengthening local content requirements, promoting the use of Thai-made parts, improving access to raw materials, and tightening rules of origin and technology transfer requirements.

Under Thailand’s EV 3.5 scheme, manufacturers are required to produce two EVs locally for every EV imported in 2026, and three EVs locally for every EV imported in 2027. The Thai government has since adjusted the rules so that EVs produced in Thailand for export can also count toward these production requirements, in response to weak domestic demand and the risk of oversupply.

Source: Reuters / Automotive Logistics / Thailand Board of Investment

PSR Analysis: The issue is not simply that EV sales are increasing in Thailand. The more important point is that Thailand’s EV policy is moving from the demand-creation stage to a more difficult question: whether that demand can be absorbed into the domestic industrial base.

Thailand’s policy was designed to first build the EV market through imports and subsidies and then require manufacturers to localize production. That logic is clear. But if domestic demand remains weak while production obligations increase, manufacturers may end up producing EVs in Thailand without a sufficiently large local market to absorb them. That would raise the risk of oversupply, price competition, and lower plant utilization.

This is why the government’s decision to allow exported EVs to count toward production requirements matters. It suggests that Thailand’s EV strategy cannot rely on domestic sales alone. The next question is not just how many EVs are sold in Thailand, but where Thai-made EVs can be sold, and how much of that production can be linked to local parts, local capability, and technology transfer.

The pressure on existing suppliers is also more complicated than the familiar point that EVs use fewer parts than ICE vehicles. That is true, and ICE-related suppliers will inevitably face pressure. But the deeper issue is that if the EV market grows mainly through imports, higher sales volumes will not necessarily create more work for Thai suppliers. If batteries, motors, inverters, and electronic components remain largely imported, Thailand’s EV market can grow without significantly deepening the local supply chain.

In that sense, 2027 may become less of an incentive-expiry date and more of a sorting point for the Thai EV market. Manufacturers with scale, export channels, distribution networks, financing capacity, and battery sourcing strength will be better positioned. Brands that depend mainly on domestic sales, or cannot absorb the cost of local production, may come under pressure.

This matters for Japanese OEMs and suppliers as well. Thailand has long been the core ASEAN production base for Japanese automakers, but that position will not automatically carry over into the EV era. Japanese companies now need to decide how to reuse the production base they built around ICE vehicles in a market where the competitive rules are being rewritten by batteries, electronics, cost, and speed.

Thailand’s case also carries a wider lesson for Southeast Asia. Expanding EV sales and building an EV industry are not the same thing. Thailand’s ability to become an ASEAN EV hub will depend less on headline EV sales volume and more on whether EV demand can be converted into domestic production, exports, local sourcing, and technology transfer. PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia, at Power Systems Research

Komatsu announced that its revenue reached a record high for fiscal 2025 due to the effects of a weaker yen and improved pricing. However, the company explained that profits fell below the previous year’s level due to declining demand for construction machinery in North America and rising costs.

In North America, the company reported that demand for residential construction remained sluggish and that machinery purchases by rental companies had also declined. It also noted that the Asian market remained generally weak.

Conversely, demand for mining equipment remained high, with the resources sector underpinning its performance. It also stated that its parts and services business had performed steadily.

Furthermore, although Komatsu acknowledged that ‘the business environment remains uncertain’, the company expressed the view that ‘infrastructure investment and mining demand will remain robust’.

Source: Komatsu Newsroom

PSR Analysis: Komatsu’s FY2025 results suggest that the global construction equipment market is no longer moving in a synchronized cycle. While North American construction equipment demand weakened due to high interest rates and softer residential activity, mining equipment demand remained resilient, creating an increasingly bifurcated market structure.

More importantly, the results highlight how aftermarket and service revenues are becoming strategically more important than unit sales growth. In previous downturns, OEM performance depended heavily on new equipment demand. Today, fleet digitization, predictive maintenance, and long-life mining assets are allowing major manufacturers to stabilize earnings even as equipment replacement cycles slow.

Another notable point is that weakness in Asia contrasts with continued strength in resource-related investment. This suggests that future equipment demand may become increasingly tied to energy transition infrastructure, mining development, and strategic commodity supply chains rather than traditional urban construction growth.

The regional divergence also creates a more favorable environment for lower-cost Chinese manufacturers in emerging markets. As financing costs remain elevated, contractors in Southeast Asia, the Middle East, and Africa are likely to prioritize acquisition cost over lifecycle efficiency, particularly in non-premium applications.

For Japanese manufacturers, this may accelerate a strategic separation between “premium lifecycle-oriented markets” and “price-driven replacement markets.” In that environment, competitiveness may increasingly depend not only on machine performance, but also on financing capability, parts logistics, uptime support, and digital fleet integration. PSR