In 2024, as the global economy begins to recover from persistent inflation, elevated interest rates, and ongoing geopolitical challenges, the performance of original equipment manufacturers (OEMs) has been uneven. However, when top construction equipment executives were asked about their outlook for 2025, a more optimistic tone emerged. In this series of Q&A interviews, Equipment World spoke with several industry leaders to gain insights into the trends shaping their 2025 strategies, their plans for investment in manufacturing and dealer operations, and the key opportunities and challenges they foresee. The discussions also covered emerging technologies such as telematics and artificial intelligence, as well as the next steps in the transition to alternative energy. Below is the 2025 outlook provided by Scott Young, President of Volvo Construction Equipment North America:
EW: Looking back at 2024, what was your most significant moment of realization?
Since the onset of the pandemic, OEMs have faced ongoing supply chain challenges. In 2024, we observed a rapid adjustment in the construction market toward more normalized supply levels. Fortunately, the North American market remained relatively robust compared to other regions, allowing us to navigate these changes and meet customer demands effectively.
2024 and 2025 represent our largest product launch years ever, with over 30% of our product lineup updated and numerous new services introduced. By expanding our product portfolio, we can now support customers across all major market segments. The growing number of electric machines underscores our commitment to sustainable solutions.
EW: What trends will influence your 2025 strategy?
Flexibility and agility are critical for responding to market demands and geopolitical uncertainties. Maintaining this flexibility in leveraging data and technology, as well as developing sustainable systems, is essential to our strategic approach.
EW: What do you see as the biggest opportunity in the construction market in 2025?
We have seen significant interest in large-scale projects such as data centers and the energy infrastructure required to support them. Major companies in these sectors are taking proactive steps and share similar sustainability goals with ours. This presents an opportunity for Volvo Group's comprehensive capabilities-ranging from transportation and construction solutions to advanced technology-to provide valuable support.
EW: What is the biggest challenge?
Continuing the transition to sustainable power systems and leveraging data to enhance customer value remain two key challenges we are committed to addressing. Despite the competitive nature of the North American market, we are confident in our ability to make meaningful contributions.
EW: What problems are your dealers facing, and how will you help them address these issues in 2025?
Like many businesses, our dealers are adapting to the post-pandemic "new normal" and transitioning toward future solutions. Inventory management and securing investment funds remain top priorities. We aim to minimize obstacles by focusing on forecasting and planning to better assist dealers in meeting customer needs. Whether a customer operates one machine or hundreds, their requirements are specific, and we strive to improve their experience while learning together throughout this process.
EW: Will you invest in manufacturing and distribution networks next year? If so, how much?
We continuously evaluate our manufacturing operations and distribution networks, prioritizing improvements that ultimately benefit our customers. Specific investment amounts will be determined based on strategic assessments.
EW: Which technology do you think has the most potential in the short term?
Artificial intelligence (AI) offers significant potential as an easily implementable tool to enhance efficiency. AI can analyze data, build predictive models, forecast demand, conduct performance analysis, and free up personnel to focus on value creation and customer engagement. This not only benefits our customers but also enhances the operational ease for our dealers and employees.
EW: What is the next step in your alternative energy plans? Have you heard any demands from end users for electric, hydrogen, or other alternative fuel equipment?
We have invested in a range of technologies, both traditional and electric, to meet customers' evolving needs during their transition to sustainable solutions. Feedback has been mixed, reflecting the ongoing education phase. Currently, demand drivers include local incentives and regulatory frameworks. Sustainable energy is not a one-size-fits-all solution; it requires multiple energy sources and integration strategies. We are committed to working closely with customers to explore possibilities and understand their specific applications and needs. Our research will continue to focus on various energy sources, emphasizing customer value enhancement.
EW: What do you think the election of Trump as president will do to your business or your customers' business?
As a global company, we operate in diverse markets worldwide and are accustomed to government transitions. While leadership changes may introduce new policies, our core focus remains unchanged: to be an excellent employer, a trusted partner for our customers and dealers, and a contributor to building communities that thrive.
EW: How will the Trump administration's increase in tariffs on Chinese products affect your business next year and beyond?
It is premature to speculate. There are still many unknowns, including which specific goods will be subject to tariffs and the manner of their implementation.
EW: Do you have any wisdom to share for the new year?
Over the past decade, our strategic focus on strong brands, robust product and market portfolios in core segments, and increasing service offerings has enabled us to maintain solid double-digit operating margins. We have achieved strong sales of heavy equipment, particularly in Europe and North America. We anticipate continued positive momentum in 2025, with a relatively strong year ahead for the construction and equipment industry. Our commitment to leading the industry's sustainable transformation will remain a priority.