IMPACT OF SURGE IN BUSINESS ON THE COMMERCIAL VEHICLE MARKET
The commercial vehicles market is gaining benefits from various businesses, as the US economy grows, repair construction projects and new construction projects increase, and consumers buy more merchandise. Recently, the American Trucking Associations (ATA) stated that their advanced seasonally adjusted For-Hire Truck Tonnage Index increased by 3.7% in 2017 over 2016, marking the largest annual gain since 2013, when it increased by 6.1%. The trucks serve as a barometer for the US economy, representing approximately 71% of tonnage carried by all types of domestic freight transportation, including manufactured and retail goods, according to the ATA.
Daimler AG, the manufacturer of the Freightliner-brand commercial vehicles, increased its market share in Class 6-8 vehicles to 39.8% in North America in 2017 on higher unit sales. The demand for commercial vehicles is continually increasing, owing to good economic growth, strong residential and commercial construction, and increased consumer spending, which in turn has resulted in record freight tonnage and high fleet capacity utilization. Additionally, according to PACCAR executive vice president, the US and Canadian Class 8 truck industry retail sales are expected to increase to a range of 235,000-265,000 trucks in 2018.
WHAT IS THE CURRENT TREND IN THE COMMERCIAL VEHICLES MARKET?
Big Construction Venture Provided Momentum to Commercial Vehicles In 2017
The overall commercial vehicle market saw marginal sales growth of more than 3% in the past few years, due to weakening global crude oil prices, the economic slowdown, and political instability in many regions. In 2016, the Middle East faced fuel price paradigm because of the augmented decrease in the costs of crude oil. As the Middle Eastern countries are majorly import-driven and are referred to as oil economies, so the decline in crude oil prices had the significant impact on all types of investments in these countries. Consequently, resulting in a significant decline in commercial vehicle demand, especially in the past three years. However, the demand for commercial vehicles restored in 2017, as the number of construction projects and recovered oil prices increased.
Currently, India is witnessing a boom in commercial vehicle demand, and the industry is expected to record a CAGR of 15% during the forecast period. The most prominent manufacturer of commercial vehicles in the Indian automotive industry is TATA Motors, and the company recently made a bold move by entering the UAE market. In 2015, the company began selling its smaller, light commercial passenger vehicles in UAE as part of its global roll-out plan. TATA sold 24- to 36-seater vehicles, mainly for schools and transporting laborers in the UAE and the other parts of the region.
Commercial vehicles’ major application areas are the freight and transportation sectors. The expansion of rail network, which is comparatively cheaper than road transportation throughout the world, is anticipated to affect the growth of commercial vehicle sales by 2025. Moreover, the rising demand for safe and efficient transportation of goods and passengers is projected to increase the demand for rail and air transportation and anticipated to have an adverse impact on the commercial vehicle market, globally.
WHAT COMMERCIAL VEHICLE OEMs AND REGULATORS NEED TO FOCUS ON?
- There are various factors driving the commercial vehicle market, which can be grouped into company-specific and environmental factors. OEMs should take the following steps:
- Dynamically be involved in strategic partnerships and industry alliances to attain the necessary scale and drive the creation of industry-wide standards with set protocols and interfaces. Collaborations with major IT and digital players will likely be necessary, in order to gain the necessary knowledge.
- Master a number of technological requirements, like the innovation of sensors, artificial intelligence, and connected technologies that are key in developing autonomous vehicles. Significant R&D expenditure should be backed by early monetization through connectivity features and services
- Adapt to the current OEM business model based on the new technological features to find new ways of commercializing on the vast amounts of data generated by the numerous autonomously driving trucks on public roads.
About the market
The global commercial vehicle market is expected to grow rapidly over the forecast period. The market is growing because of the increased demand for logistics and increasing trade of goods across the world.
Mordor Intelligence is a market intelligence and advisory firm operating in 14 industry segments, serving over 600 clients worldwide.