The commercial vehicle industry has exceeded all expectations and bounced back strongly from the financial crisis. Global sales are expected to exceed three million units by 2016.
The industry is at an important crossroad: globilisation, technology development, ongoing regulatory change and growth in emerging markets are set to change the face of the industry in the next decade. Industry stakeholders are faced with an interesting dynamic as demand in developed markets stagnates and emerging markets demand more attention. They are likely to be significantly impacted by rapidly changing events across the entire value chain – from evolving preferences and needs of fleet operators or managers, to the operation of broader distribution channels and expanding supply chains.
For commercial vehicle value chain participants to thrive over the next decade, they will need to align research and development and market demand analyses to adapt products that stay ahead of the regulatory curve and meet the needs of a globalising customer base.
In order to become market leaders, companies across the commercial vehicle value chain need to assess how well they are prepared to respond to the evolving industry trends so they can capitalise on the opportunities that lie ahead. They need to ask themselves how and where the demand for trucks will evolve, as well as how the products and business models need to adapt to changing regulatory environments and evolving needs of fleet operators. On top of this, they need to consider what the supply chain issues and implications that must be addressed in order to compete in this dynamic market.
In exploring these questions, six mega trends are identified in Mega Trends Shaping the Global Commercial Vehicle Industry, the Ernst & Young Global Automotive Center’s latest industry analysis. These six mega trends will significantly impact the revenues, costs and profitability of the commercial vehicle industry as demand for trucks increases. The mega trends, which will help companies innovate for future success, are:
- Truck owners demand technology solutions enabling greater transparency into their operations, vehicle and driver management
- Regulations force truck owners to change operating and buying behavior while driving Original Equipment Manufacturers (OEMs) to offer cleaner and safer commercial vehicles
- Stagnation of developed markets and cyclicality of demand driving OEMs to expand geographic footprint and review operational efficiency
- OEMs reinvent product portfolio to increase “glocalisation” (creating local products and brands), expand presence across truck segments and offer customised value added services to improve retention and diversify revenue sources
- Tier 1 suppliers increase business resilience by offering innovation and operational flexibility for OEMs while simultaneously expanding aftermarket and fleet offerings
- Globalisation and economic uncertainties expose the commercial vehicle industry to new and changing risks, including supply chain, manpower and economic risks
For commercial vehicle value chain participants to thrive over the next decade, they will need to align research and development and market demand analyses to adapt products that stay ahead of the regulatory curve and meet the needs of a globalising customer base. They will also need to adapt product strategy, service offerings and integrated technologies to offer increasingly important value propositions to fleet managers and customers that seek application flexibility and operating transparency. Finally, they will need to evaluate and address the inherent supply and value chain implications that are arising in areas such as flexible capacity, talent management and supply chain operations.
It’s a tall order, but those that anticipate and embrace this rapid change will no doubt benefit and help change the face of the industry.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Jeff Henning is Global Automotive Markets Leader at Ernst & Young
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