Small Engine Market to Hit USD 17 Billion by 2035, Growing at 4.1% CAGR

The Small Engine Market is poised for steady growth, with the industry valued at USD 10.4 billion in 2024 and projected to reach USD 17 billion by 2035. This expansion reflects a CAGR of 4.1% from 2025 to 2035, driven by rising demand for compact, efficient engines across applications such as lawn equipment, construction machinery, generators, and agricultural tools. Increasing mechanization, advancements in engine technology, and a growing focus on fuel efficiency and low-emission models are further supporting the market's upward trajectory.

The small engine market, comprising engines used in lawnmowers, chainsaws, generators, and motorcycles among the other outdoor power equipment, has undergone a transformation of unprecedented dimensions over the last few years due to small engine technology trends, regulatory pressures, and shifting consumer preferences.

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Increased demand for small engines is driven by increased demand in outdoor power equipment of both - residential and commercial complexes. In addition, the fact that homeowners always make investments in tools and equipment used for lawn care, landscaping, and the other gardening activities can't be ignored.

Market Segmentation (By Engine and Fuel Type)

While the provided data does not offer a complete segmentation by "service type" or "sourcing type," the market can be effectively analyzed by its primary product attributes:

Segment

Sub-Segment

Key Insights (2025-2035)

By Fuel Type

Gasoline Engines

Dominates the market (projected $approx$ 77.4% share in 2025) due to widespread availability, affordability, and high power output.


Diesel Engines

Projected for robust growth, especially in heavy-duty and industrial machinery due to their durability, higher efficiency, and fewer repairs.


Electric Engines

Fastest-growing segment driven by demand for low-emission, quiet operation, particularly in the 11-20 HP range and for residential outdoor power equipment (OPE).

By Engine Type

Horizontal Engines

Expected to lead the market (projected $approx$ 53.3% share in 2025) due to their compact size and suitability for power tools, lawnmowers, and generators.

Vertical Engines

Used predominantly in applications like riding lawnmowers and larger equipment.

By Power Output

3-10 HP

Common in residential lawn tractors and generators.

11-20 HP

Noted as the fastest-growing power segment, benefiting from the trend towards eco-friendly and battery alternatives.

By Application

Outdoor Power Equipment (OPE)

The largest segment, including lawnmowers, snow throwers, and chainsaws, driven by residential and commercial landscaping demand.

Generators

Expected to register the fastest growth among specific applications, fueled by extreme weather events and increased demand for portable power.


Construction Equipment

Includes concrete mixers and compactors, seeing growth from global infrastructure development.


Agricultural Equipment

Includes power tillers and mini tractors, driven by mechanization in farming.

Regional Analysis

The market displays distinct growth dynamics across key geographic regions:

North America: Remains the largest market (projected 27% to 32.6% market share by 2035).12 Growth is driven by the vast market for outdoor power equipment, extensive use of snow blowers, and increasing equipment rental in the construction sector.

Asia-Pacific (APAC): Projected to be the fastest-growing region (expected to hold over 36% market share by 2035).13 Growth is fueled by rapid urbanization,

industrialization, a surge in outdoor leisure activities, and growing demand for advanced industrial and gardening equipment in emerging economies like China and India.

Europe: A mature market with strong regulatory influence, particularly concerning emission standards (e.g., Stage V), driving innovation in cleaner engine technologies.

Market Drivers and Challenges

Market Drivers

Rising Demand for Outdoor Power Equipment (OPE): Increased consumer interest in gardening, landscaping, and home ownership activities, amplified by a post-pandemic DIY boom, is a core driver.

Technological Advancements: Continuous innovation in engine design, including direct fuel injection, variable valve timing, and lightweight materials, enhances efficiency and performance.

Growth in the Rental Market: The preference for renting equipment in the construction and landscaping sectors is rising to minimize capital expenditure, driving consistent demand for small engines.

Infrastructure and Construction Expansion: Significant infrastructure development, particularly in emerging APAC economies, increases the need for small engine-powered construction equipment.

Market Challenges

Stringent Emission Regulations: Compliance with evolving global and regional standards (e.g., CARB Tier-5, Euro 7) requires substantial R&D investment, increasing production costs.

Competition from Alternative Power Sources: The rapid adoption of battery-powered and electric tools, particularly in the residential OPE segment, poses a direct threat to traditional small ICE manufacturers.

Fluctuating Raw Material Prices: Volatility in the cost of key raw materials and fuel can impact profitability and market stability.

Need for Regular Maintenance: The necessity for routine engine maintenance (oil changes, air filter replacement) can be a deterrent for some consumers compared to low-maintenance battery alternatives.

Market Trends and Future Outlook

Key Market Trends

Electrification and Hybridization: The most significant trend is the notable shift toward electric and hybrid small engines for reduced noise and emissions, with electric models rapidly gaining traction in segments like handheld OPE
Smart and IoT Integration: Manufacturers are integrating smart technologies and IoT (Internet of Things) for features like remote monitoring, AI-powered diagnostics, and predictive maintenance to enhance user experience and operational capabilities.

Focus on Sustainability: Driven by consumer and regulatory pressure, there is an increased focus on developing greener small engines that offer enhanced fuel efficiency and lower environmental impact.

Future Outlook

The small engine market will be characterized by a clear division: a resilient core for high-power, heavy-duty applications (where diesel/gasoline ICEs still offer superior power-to-weight and runtime) and an accelerated shift towards electric solutions for lower-power, residential, and noise-sensitive commercial uses. The future will involve a blend of innovative, cleaner ICE technologies and an expanding ecosystem of high-voltage battery-powered and hybrid products.

Key Market Study Points

Power Output Sweet Spot: The 11-20 HP segment is expected to be a major growth engine, indicating increasing demand for mid-range, powerful, yet efficient equipment.

Regional Dominance Shift: While North America is the largest market, the Asia-Pacific region is forecast to hold the highest market share by 2035, signifying a fundamental shift in the global demand center.

Dominant Fuel: Gasoline engines will continue to hold the largest market share despite the rise of electric models, underscoring their irreplaceable role in many applications.

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Competitive Landscape

The small engine market is competitive, featuring established global manufacturers and emerging technology players focused on electrification. Key market participants are strategically investing in R&D for innovative engine technologies, expanding their product portfolios, and strengthening global distribution channels.

Key Companies Profiled in the Market: https://www.transparencymarketresearch.com/checkout.php?rep_id=79364<ype=S

Briggs & Stratton
Honda Motor Co., Ltd. (Honda Power Equipment)
Kohler Co.
Cummins
Deutz AG
Wärtsilä
Caterpillar
Generac Holdings

Recent Developments

Key developments illustrate the market's strategic direction:

Focus on Battery Expansion (Example): A major market player announced an investment of USD 60 million to expand battery-pack production, aiming for battery models to account for 80% of total units by 2035. This highlights the strategic commitment to the electric transition.

Strategic Partnerships: Companies are engaging in co-development agreements to create hybrid and gas-powered general-purpose engine solutions for applications like on-site power generation and backup systems.

Product Launches: New product lines emphasize high-efficiency small-to-mid-range gasoline and propane engines to meet demand for versatile, stationary, and portable power-generation applications.

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