Overall, the global market for medium and heavy duty trucks contracted in 2012 compared to the record-breaking year in 2011. This was caused by a declining truck demand in major volume markets such as China, India, Brazil and Europe. However, the market grew in North America and Russia, with the latter recording over 10 percent growth in sales.
Frost & Sullivan’s research indicates that among BRIC countries (Brazil, Russia, India and China), Russia emerged as the fastest growing market. Some of the Next 11 markets, as well as countries such as Indonesia, Malaysia, Turkey and all major African countries, experienced robust truck sales.
Positive signs from key economies indicate that the global GDP is expected to grow by 3 to 3.5 percent in 2013. We expect medium and heavy duty truck demand to increase by 5.6 and 3.6 percent, respectively. This will lead to the global sales of medium and heavy commercial trucks to reach an expected 2.8 million units in 2013.
Medium Duty Segment
The Next 11 and Rest of the World (RoW) markets will contribute towards this strong growth. The existing road infrastructure, dense population and rising urbanization in some of the developing markets make medium duty trucks more adept to meet rising demand for freight mobility, hence the faster growth of this segment in 2013.
We anticipate several OEMs developing a new breed of trucks for global urban markets. This variety will soon be tagged as “city trucks.”
So, while on one hand we will experience proliferation of mega-trucks in some developed markets over the next three to five years, there will also be a proliferation of “city trucks” to facilitate hub and spoke logistics in both developed and developing markets. These vehicles will feature gross vehicle weight ratings from sub-1 ton to approximately 14 ton GVWR.
Additionally, the global low-cost truck (LCT) market will continue to grow at a 8.6 percent compound annual growth rate (CAGR) over the 2009 to 2016 period. We anticipate that 2013 will be the year when these trucks experience sustainable penetration in BRIC, Next-11 and other non-TRIAD markets, with a strong possibility of early stages of proliferation in TRIAD markets in certain non-long-haul application areas.
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.
Shifted OEM Focus
Continued economic uncertainty in TRIAD and moderate growth rates in BRIC will lead OEMs to shift focus on Next 11 and African markets. These markets offer strong growth potential because of rapid economic development, which is leading to higher freight demand.
Several Next 11 markets are expected to post nearly double-digit growth in new truck sales in 2013. Of these, Turkey, Indonesia and Mexico are looking attractive for long-term sustainable growth.
Global OEMs are looking at leveraging their global truck platforms for market entry and expansion in these growth markets, thus offsetting declining sales in their respective home markets.
It appears that 2013 will be the year when several advanced technologies will receive a boost, and several technologies will be made available that can create a foundation for a truck that is more electronically assisted, connected and safer, and features a more attractive total cost of operation.
Customers, and thus OEMs in North America and Western Europe, will focus more on “soft technologies,” such as telematics, cabin design and safety technologies. Asian OEMs will focus more on powertrain technologies for fuel efficiency and regulation compliance reasons.
The rise in platform-based truck production will help bridge this gap. Frost & Sullivan estimates that by 2018, one out of every three heavy trucks manufactured globally will feature a platform-based lineage.
By 2018, advanced technologies, such as natural gas (NG) powertrains, advanced safety technologies, health, wellness and well-being changes, along with advanced powertrain technologies, will receive a major impetus.
The global penetration of NG and hybrid electric trucks is estimated to reach 0.8 percent this year. An estimated 16,000 units of NG (CNG/LNG) medium and heavy duty trucks are expected to be sold globally, with around 6,000 sold in North America.
Hybrid electric truck sales are also expected to amount to 6,000 units, with North America continuing to be the major market for this segment.
Frost & Sullivan research also indicates a growing demand for telematics enabled Fleet Management Services (FMS) in the North America, Europe, Russia, Brazil and South Africa markets. Subsequently, the Middle East and Asia markets are expected to gain momentum beyond 2015.
Within FMS, track and trace emerges as major application area in BRIC and Next 11 nations, while in North America and Europe vehicle and driver performance monitoring applications, such as prognostics, are expected to be the focus areas.
Sandeep Kar is global director of commercial vehicle research for Frost & Sullivan’s Automotive & Transportation business. Bharani Lakshminarasimhan is the business’ team leader of commercial vehicle research. Frost & Sullivan provides in-depth research and best-practice models to drive the generation, evaluation and implementation of powerful growth strategies for a broad range of industries. www.frost.com.