Caterpillar Chairman and CEO Doug Oberhelman announced Monday he will retire in January, more than 41 years after he started with the heavy machinery company.
He will be succeeded as CEO by Jim Umpleby, who has worked with the Peoria, Illinois-based company for 35 years.
"Our people have heard me say many times that my greatest responsibility as Chairman and CEO is to manage Caterpillar for today and position the company and its future leaders for long-term success," the 63-year-old Oberhelman said in a statement. "It has been an honor and a privilege to lead this company, and I am confident in the choice of my successor, Jim Umpleby."
Umpleby, 57, will become CEO and join the board on Jan 1. The company, founded in 1925, also said Dave Calhoun will become nonexecutive chairman of the board.
Oberhelman, who became CEO in 2010, will remain the executive chairman until March 31. The chief executive led Caterpillar to its highest sales and revenue in its history in 2012, but it subsequently encountered headwinds.
A spokeswoman for Caterpillar told CNBC that Oberhelman's departure was his choice and that this transition is in line with that of past CEOs.
Earlier this year, Caterpillar cut its full-year sales and profits forecast as weak demand for equipment used in the mining and energy sector continued to weigh on its business.
Eli Lustgarten, a senior research analyst for Longbow Securities, said Oberhelman's retirement makes sense.
"Well, it's happening now because Doug has two years more. He's 63 years old and usually they retire at 65," Lustgarten told CNBC's "Squawk on the Street." He noted that the move will give the new CEO time to learn to navigate the company's challenges.
"And it's been pretty clear that Caterpillar's tough business conditions aren't going to disappear in  or probably . [Allow Umpleby to] have his hands around everything going on and hopefully some things begin to improve in 2018."
Caterpillar's stock was trading slightly lower in early trade Monday. The stock is up 29 percent year to date.
— Reuters contributed to this report.