Off-Road Vehicle Market Research Report: Forecast (2023-2028)

Market Definition

Off-road vehicles, also overland or adventure vehicles, are designed with characteristics such as open treads and oversized tires with deep and flexible suspension to operate on public roads and rough terrain. In addition, overland vehicles are majorly equipped with a four-wheel drive system (4WD) or all-wheel drive (AWD) to attain operational requirements. Also, these vehicles perform a wide range of applications, such as good carriers, agricultural applications, passenger commutes, and more.

Market Insights

The Global Off-Road Vehicle Market is projected to grow at a CAGR of around 5.8% during the forecast period, i.e., 2023-28. The market growth is attributed to the various applications of off-the-road vehicles in different sectors, including agriculture, construction, military, and recreational activities. In addition, the surging popularity of adventurous events, tournaments, and sports among youth and vehicle enthusiasts has also positively influenced the industry. Besides, the research and development in the industry by many key market players to add and launch smooth modification has again added to the industrial expansion.

Moreover, the emergence of electric and hybrid off-the-road vehicles has been fueling the market forward and is likely to prevail in the same direction. Integrating electric vehicles and hybridization opens the scope for further product modifications, like artificial intelligence, battery advancement, and others. Along with this, the paradigm shift to an electric vehicle will likely bode well for the market. For instance,

• On March 2021, Honda introduced an Overhead valve (OHV) air-cooled 229cc engine, which is longitudinally mounted for more efficient power transfer.

However, the trade restriction over different regions and the stigma of off-road vehicles being unsafe and high maintenance are likely to restrain the market expansion. On the contrary, the budding interest of consumers in various adventurous activities and the vehicles easing human labor in multiple industries offer robust opportunities to the market.

Market Dynamics

Key Driver: Sports Events and Multiple Applications in Different verticals

The additional safety features have increased the number of recreational events and sports tournaments, driving the market forward. Sports organizations arrange tournaments on state and national levels with titles and awards, spreading the popularity of such events and the market. Additionally, the fabricated applications of the vehicles in agriculture, construction, military, and other sectors have been driving the manufacturer to deliver better-optimized products and continue doing research and development with the needs of each industry as goals. For instance,

• in September 2020, John Deere updated its legendary Gator Utility Vehicles (UVs) line. Likewise, with hikes in military budget globally and successful application of ATVs in operations due to offered modularity and functionality, the industry has been expanding fortuitously.

Possible Restraint: Regional Trade Restriction Combined with The Higher Cost of Overland Vehicles

The manufacturing and distribution industry is unevenly distributed globally, leading to various regulations and restrictions fragmented across different regions. For instance, China continues deploying several export restraints, such as quotas, licensing, minimum prices, duties, etc. Likewise, the US also implies various regulations on several raw materials, being the leading producer. Collectively, this leads to hikes in tariffs and product pricing between these regions.

Moreover, increasing the addition of features will also add up to product pricing and other regulations and duties to complete, combined with already high maintenance costs leading to restraining market flow and further affecting consumer buying behavior. Other than this, higher accident rates, safety concerns, and other dangers of off-roading activities could further hamper the market enlargement.

Growth Opportunity: Growing Appetitive for Recreational and Adventurous Trips

Off-the-road vehicles are gaining more popularity with rising interest in sports, recreational, adventurous, and leisure activities. With the ease in lockdowns and restrictions after the Covid-19 pandemic forcing people to stay inside, the overall appeal and participation in such activities surged, opening investment and other opportunities for various market players. After the electric revolution in passenger cars was received favorably by the industry, the introduction of different electric off-road vehicles has been going well for the market. For instance,

• in 2021, Polaris launched its EV ATV, Ranger XP Kinetic, a model it developed in collaboration with the Zero motorcycles company. It has a 14.9kWH battery and can travel 45 miles on a single full charge. Further development, specifically in UTV and ATV, is likely to shift buyers' interest favorably, posing a lucrative opportunity for the industry.

Key Trend: Rapid Adoption of Electric or Hybrid Off-The-Road Vehicles

The development of hybrid electric vehicles incorporating sensors and other modifications, such as integration of artificial intelligence (AI), battery advancement, the combination of electro-hydraulic actuators and more are anticipated to accelerate the market further. The industry is experiencing a paradigm shift to electronic vehicles for better productivity and hybridizing to obtain the best results. Such explorations are on the rise, effectively proposing favorable fluctuations to the market. For instance,

• In March 2021, BRP invested USD 300 million over the next five years to electrify its existing product lines by the end of 2026.

Market Segmentation

Based on Application

• Sports
• Entertainment
• Agriculture
• Hunting
• Military
• Others

Among them all, Sports acquired the largest market share and is expected to prevail in the same trend in the forecasting period. It is aided by the rising number of professional racing championships and series conducted globally, especially in North America, including The Grand National Cross-Country Series and more. Racing and Sports club procure different sports vehicles expanding the market through such events. Additionally, to stay relevant, various market participants ramp up their portfolios by launching new editions and adding new technologies and other features. 

Moreover, Military and Agriculture are also anticipated to gain significant market share during the forecasting years. These vehicles offer maneuvering and mobility for strategic missions, including off-road transport, utility, combat applications, and more, further gaining grounds for market elevations. Overland vehicles have various applications in agriculture, making everything smoother, for instance, working on wet trenches, ditches, and more. The growth in agricultural activities promises a surge in market expansion.

Regional Projection

Geographically, the Global Off-Road Vehicle Market expands across:

• North America
• South America
• Europe
• Middle East & Africa
• Asia-Pacific

Globally, North America dominates the Off-Road Vehicle Market with the largest share and is anticipated to prevail in the same trend during the forecast period. This ascension attributes to the higher participation in recreational activities compared with other regions, resulting in elevated demand for OTR vehicles. Also, the well-established off-road industry of the US further fuels the market expansion, along with the launching of technologically advanced vehicles. Especially with the prosperous years in sales as the youth’s preference for sports and recreational activities surged by the end of the Covid-19 pandemic.

In addition, the rising recreational expenditure with increasing off-roading events combined with the vast availability of a broader range of products at varied prices further enhance the market development. Furthermore, to reduce hindrances and secure safety issues, regulatory authorities, such as the Recreational Off-Highway Vehicle Association (ROHVA), the United States Consumer Product Safety Commission (CPSC), and the US Environmental Protection Agency (EPA), have established numerous regulations related to the use of ATVs and occupant safety, collectively assisting in market expansion.

However, Europe also promises admirable ascension in the market in further years, aided by the rising consumer purchasing power and adoption of new technology. Likewise, the increasing interest in the sporting contest and utility activities combined with Europe being a hub of car makers and enthusiasts, with surging tourism and leisure activities are expected to continue to expand the industry.

Recent Developments in the Market

• In September 2022, Arctic Cat unveils all-new catalyst snowmobile chassis at Hay Days.
• In March 2022, Polaris Industries expanded their distribution facility in Wilmington, Ohio.
• In September 2021, Yamaha designed Grizzly 90 for young ATV riders ages ten and above. It is a sports model with a low-maintenance 90cc engine that utilizes wet-sump lubrication and is air-cooled.

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