【Technically Excellent, but Wrong Model】Why Some OEMs Are Getting Stronger While Others Stagnate
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Today, competition among original equipment manufacturers (OEMs) is no longer limited to the hardware of the equipment itself, but more focused on equipment availability, data application, full-cycle services, and ecosystem construction. But why can some enterprises continue to grow and expand in the industry transformation, while others get stuck in a bottleneck and stagnate? Kevin Yule, Deputy Consultant at abcg, a consulting firm in the off-highway machinery sector, conducted an in-depth analysis on this, interpreting the profound impact of business model transformation on the entire off-highway machinery industry and uncovering the core crux of the "imbalance between technology and model".
In the past, the core criterion for measuring the success of an OEM was its hardware strength: a more powerful engine, a more robust and durable body structure, a richer list of configurations, and relying on an extensive dealer network to maintain customer relationships and complete product delivery—this was the entire core logic for manufacturers to seize market share. At that time, although technology was important, it was mostly an additional function embedded in the machine, and the core value was still concentrated on the durability and operational efficiency of the equipment. Dealers assumed the dual role of "sales + after-sales service" and were the only bridge connecting OEMs with customers. Now, this traditional logic that has lasted for many years has been completely subverted. According to industry forecasts, by 2026, the focus of competition among OEMs will shift from the performance parameters of the machines themselves to software-driven services and platform ecosystems. This industry-wide transformation is known as "servitization transformation". In practical operation, this means that OEMs must completely restructure their organizational structure, promote the comprehensive upgrading of dealer roles, and continuously increase investment in digital capability building to break the shackles of traditional operation models.
However, not all OEMs can truly realize the value of their huge technological investments. In reality, some OEMs take the initiative to break inherent thinking, adjust their business models to adapt to industry transformation, and deeply integrate technology with services; others only go through the motions, seemingly promoting digitalization and upgrading services, but in fact still adhere to traditional ideas, making it difficult to convert advanced technological investments into unique customer experiences and sustainable competitive advantages. The gap between the two has never been about the advanced nature of the technology itself, but about whether the business models of OEMs and dealers have truly evolved, and whether they can transform technological innovation into tangible customer value. Simply put, the key to determining the success or failure of an OEM is the in-depth transformation of its business model, not just the possession of advanced technology—technology is the foundation, and the model is the core carrier for monetizing the value of technology.
With the popularization of digital technology, dealers are no longer the only entry point for customer relationships. Digital means such as software subscriptions, licenses, data platforms, remote software upgrades, and privacy agreements allow OEMs to directly reach end customers and achieve direct "OEM-customer" connection. This also requires OEMs to participate more deeply in the entire life cycle of equipment than ever before, transforming from mere product sellers to continuous service providers. Currently, end customers have begun to expect consumer-grade user experiences, such as instant activation of equipment authorization, remote configuration and debugging, real-time performance data monitoring, and predictive maintenance support. These once "value-added items" have now become basic conditions for industry access. In the new competitive landscape, OEMs need to equip professional digital talents, optimize service processes, and build efficient service systems. They must not only launch leading technologies but also provide high-quality customer experiences throughout the entire cycle. Good technology and good experience can attract customers to use, but the key indicator is whether the technology can be continuously and effectively applied. This relies not only on the OEM's technical and service capabilities but also on the support of strong channel partners.
Dealers are still indispensable in the industry, but their roles are constantly evolving. As OEMs increasingly grasp customer data, dominate digital customer experiences, and manage subscription-based business relationships, the traditional division of labor model of "OEMs produce, dealers sell" is no longer applicable. In addition, with the increasing complexity of technology, OEMs have gradually occupied a more core position in background management, remote monitoring, and 24/7 services. Especially cutting-edge technologies such as autonomous driving require continuous background monitoring, centralized management, and large-scale real-time data sharing. These capabilities are more concentrated at the OEM level rather than at the dealer level. Therefore, OEMs that have invested heavily in the field of autonomous driving are rethinking how to directly provide efficient support to customers under the "always online" service model. At the same time, OEMs generally realize that dealers need to take a more proactive role in technology promotion and landing applications. They must add professional technical personnel, build a 24/7 service system, and their teams can no longer focus solely on equipment sales, but also help customers real-time perceive and realize the core value brought by the technology in the machines.
However, this transformation process faces realistic profit challenges. From the dealers' perspective, the return from selling and supporting software and digital services is often difficult to match the required scale of human and material investment. As the proportion of subscription-based revenue in OEMs' total revenue continues to grow, the traditional profit structure of dealers relying on hardware sales for gross profit can no longer support the development of new businesses such as software services and technical support. This means that if OEMs do not redesign the dealer incentive mechanism and share the revenue from software services and data services with dealers, the revenue that OEMs obtain from new technologies such as autonomous driving will be much higher than that of dealers, which will further dampen dealers' enthusiasm for participating in the transformation and hinder the landing and popularization of technology.
Currently, some OEMs have begun to try to break this dilemma by deeply integrating offline physical services with online digital experiences. For example, Volvo acquired its largest dealer to promote technology development and overall customer experience construction with a unified approach, achieving coordinated efforts between the manufacturer and dealers. But Kevin Yule emphasizes that what ultimately determines the success or failure of an OEM is not how advanced its technology is, but whether it can take the initiative to restructure the business model between itself and its dealers to make advanced technology truly effective. This is also the fundamental reason why many excellent technologies are ultimately difficult to popularize. Those OEMs that have truly made breakthroughs understand that servitization transformation is not only about accelerating product iteration and optimizing software functions, but also about aligning incentives with dealer channels, clarifying the main responsibility for customer value, and building a new operation model around improving customer value. They will continue to invest in talents, processes, and systems to make technology truly play a role at the construction site and allow customers to feel the efficiency improvement and cost savings brought by technology.
In the final analysis, OEMs must completely rethink the entire "OEM-dealer-customer" chain model. If they only require dealers to take more technical service responsibilities without changing the existing incentive mechanism or sharing the benefits brought by technology, it will only weaken the customer experience and slow down the pace of technology popularization. Only through new models, in-depth integration, or more unified collaborative operation between manufacturers and dealers, and firmly binding responsibilities with commercial benefits, can a system supporting long-term value be built. Enterprises that fail to do this, even if they continuously launch advanced technologies, will find it difficult to convert them into lasting customer value and real competitive advantages, and will eventually stagnate in the industry transformation and be eliminated by the times.
CN Used Machinery buyer update
Today, competition among original equipment manufacturers (OEMs) is no longer limited to the hardware of the equipment itself, but more focused on equipment availability, data application, full-cycle services, and ecosystem construction. But why can some enterprises continue to grow and expand in the industry transformation, while others get stuck in a bottleneck and stagnate? Kevin Yule, Deputy Consultant at abcg, a consulting firm in the off-highway machinery sector, conducted an in-depth.
This update adds practical context for overseas buyers who use industry news to compare excavators, loaders, road machines, trucks, and other construction equipment before purchase.
Key Takeaways
- Use this topic to compare machine demand, brand positioning, and likely resale interest before choosing equipment.
- When a model or market trend looks attractive, confirm real stock condition, photos, working video, service access, and export documents.
- Do not rely only on a model name. Check configuration, year, hours, engine, hydraulics, tires or undercarriage, and destination shipping cost.
How Buyers Can Use This Information
For procurement decisions, connect this article with actual equipment inspection. A market trend can help narrow the brand or machine type, but the final decision should be based on verified machine condition, application fit, spare parts availability, and total landed cost.
Inspection Questions
- Which model, serial number, configuration, and condition photos are available?
- Can the supplier provide a working video and loading photos before shipment?
- Are export documents, shipping route, and destination port requirements confirmed?
- Does the machine match the buyer's actual project: road work, earthmoving, quarry, logistics, or rental use?
FAQ
Does this article replace machine inspection?
No. It should support research, but buyers should still confirm the exact machine condition before payment.
Can CN Used Machinery help verify equipment?
Yes. Buyers can request photos, working video, condition details, and export support for specific machinery listings.