The idea behind global vehicle platforms is to use common design, engineering and production efforts to produce vehicles for world-wide use. These platforms reduce complexity and utilize efficiencies across the supply chain to help lower costs for vehicle OEMs and improve time to market.
The conversion to global platforms is accelerating and this will have an impact on the vehicle maintenance and repair industry.
So, too, will a new influence: the introduction of global low-cost trucks (LCTs), covering all truck classes, by foreign vehicle manufacturers.
The concept behind LCTs is not about making cheap trucks. It’s about OEM alliances and partnerships to make trucks that cost less to produce.
I had the opportunity to sit in on a presentation about global low-cost trucks delivered during Heavy Duty Aftermarket Week, the largest North American gathering of the independent heavy duty industry. Ryan Carmichael and Sandeep Kar, analysts with business research and consulting firm Frost & Sullivan, reported on highlights of the firm’s study, Strategic Analysis of the Global Low Cost Truck Market.
Its scope included interviews with more than 100 key OEMs and suppliers from around the world.
The study determined that the global truck market is experiencing a rapid proliferation of LCTs as a result of strategic initiatives by truck manufacturers, either individually or through joint ventures and alliances. LCTs are priced 20 to 25 percent lower than conventional trucks and are penetrating markets all over the world.
Carmichael and Kar said global LCTs are gaining interest by U.S. fleets because of several key elements: changes in brand perception of foreign OEMs; growing importance of total cost of vehicle ownership and other fleet operating considerations; modification of vehicle replacement cycles; and changes in fleet demographics and duty cycles.
Over the next six years, Frost & Sullivan believes 21 LCT medium and heavy duty vehicles/platforms will likely be introduced by global OEMs.
OEMs already engaged in global partnerships include Daimler, Iveco, KamAZ, Navistar, Nissan, Paccar, Tata, Volkswagen/Scania/Mann and Volvo.
Frost & Sullivan anticipates global production of light, medium and heavy duty LCTs will be some 3.2 million by 2016. The vast majority of these vehicles will be produced in China - around 1,414,000 units. The next largest producer – at 617,000, the European Union, then India – 487,300; Japan – 322,500; South Korea – 197,250; North America – 130,000; Brazil – 32,000.
The firm foresees light duty global LCTs coming with a 1.8L to 2L diesel engine in the 120- to 140-horsepower range mated to a 5-speed transmission. The vehicles will cost between $16,000 and $20,000.
Medium duty LCTs will be equipped with a 5L plus diesel with 200 plus horsepower and a 6-speed transmission, priced between $32,000 to $40,000.
LCT heavy duty models, in 25- to 40-ton gross vehicle weight ratings for urban and regional applications that use day cabs and do short-hauling only, are expected to be priced at $70,000 to $85,000. These will be powered by 250- to 300-horsepower 6L to 10L diesel engines with a 9-speed transmission, and have hydraulic power steering, air drum S cam brakes, an inverted bogie suspension with an optional air suspension and a C frame chassis.
Carmichael and Kar said it will take time for LCTs to work their way into U.S. marketplace. Among the barriers to entry: distribution and customer support, stringent emission and safety regulations, the strong position of local OEM dealers and the need for unique designs in the medium and heavy duty truck segment.
Along with utilizing global manufacturing efficiencies, creating LCTs must include cutting costs throughout the vehicle, the analysts said. Reductions are being made to the powertrain by downsizing the engine, including new materials and using low-speed manual transmissions. There are lower axle ratios and chassis are made with lower-priced materials and basic brake, steering and suspension technologies.
Cabs are getting narrower and are being constructed with cheaper materials. Driver comfort, and convenience items and features are being cut as well. There are very minimum or no discounts on vehicle purchase price, and warranty protection is lowered.
What will be the effect of all this “de-contenting?”
The Frost & Sullivan study predicts a two-tiered North American truck marketplace will likely emerge. There will be the low-cost truck segment and a premium truck segment, with the mid-priced segment going away.
Guess that answers my question. You will continue to get what you pay for.
I welcome your thoughts and comments.