A few weeks back, the leaders of the commercial vehicle parts and service industries got together for several days at Heavy Duty Aftermarket Week and for HDMA’s Heavy Duty Dialogue 2011 conferences. The theme was: Game-Changers in the Commercial Vehicle Industry.
As one always expects from a conference at the beginning of the year, multiple changes are being predicted.
This year it was different, more significant. There are some major changes on the horizon in this industry. I know that sounds like an alarmist’s comment, but I have been around this industry my entire career and it has me concerned.
Will we be ready for an onslaught of low cost trucks from Asia – both China and India? At the Heavy Duty Dialogue, Frost & Sullivan’s Sandeep Kar and Ryan Carmichael explained, based on their firm’s research, that lower cost, less robust and “repair unfriendly” medium to heavy duty trucks will begin appearing on our roads and in our shops.
The largest truck manufacturing country in the world is now China, with India not far behind. Both are fully capable of producing U.S. and European compliant trucks for 25 to 35 percent below the market prices of trucks built in these countries.
Both Chinese and Indian truck makers currently have substantial markets for trucks in their own regions, but they have their eyes set on the rest of the world for future growth. In these emerging markets, truck freight is the only practical method of transportation, given the cost and single-use issues with rail. Infrastructure built for both passenger vehicles and truck transport are essentially the same, whereas rail is for a single use – trains.
China will continue to produce and ship a million or so trucks and for the next few years, mainly in to its own interior, finds Frost & Sullivan’s research. As the size of the truck fleet rounds out in China or India, these countries’ truck manufacturing growth will come only from global expansion.
The interesting part of all of this is the global collaboration and partnerships occurring on the part of the major U.S. and European truck manufacturers with OEMs in China and India. Navistar, Daimler, Volvo and a few others are working very hard to secure positions in the growth markets in Asia. The major U.S. and European component suppliers are doing the same.
This is in parallel with the North American and European truck manufacturers, or directly with the emerging OEMs in Asia.
They are doing this via partnerships, joint ventures, licensing and marketing agreements, etc. The intent is to have a place in the big growth markets of the future.
It is a smart strategy, considering the certainty of the Asian truck manufacturers’ expansion into Western Europe and North America. Ensuring that they are in on the ground floor is a good way to have influence over the methods used to penetrate these markets, along with the new entries from Asia.
What does this mean to you? If you were around in the early 1970s and 1980s, you witnessed the Japanese car manufacturers coming in to this market, filling a need for lower cost, more fuel efficient vehicles. It worked great for them. U.S. car manufacturers seemed to be caught flat-footed with the strong consumer response to this major shift in the market. The big challenge was servicing these vehicles in the independent aftermarket.
The new entries to the market sort of looked, sounded, felt and smelled like domestic vehicles, but the similarities pretty much ended there. Everything was made differently – more compact, fewer serviceable components and very distinctive engines, drivetrains, brakes and suspension systems. Special training was needed to service, as well as sell parts, for the new vehicles.
With the new heavy duty version of an imported vehicle surge, many of these problems will surface again, this time in the truck industry.