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Global Truck Market at ‘Crossroad’: Ernst & Young

The global commercial vehicle industry is “at an important crossroad with globalization, technology development, regulations and emerging markets set to change the face of the industry in the next decade,” according to latest “mega trends” report released by Ernst & Young’s Global Automotive Center.

The report points out that despite having softened under the pressure of the global financial crisis, the CV market has “bounced back strongly in the past two years with global sales expected to exceed 3-million units by 2016.”

Nonetheless, the report’s authors argue that CV stakeholders are “likely to be significantly impacted by rapidly changing events— from the preferences of fleet operators or managers, to distribution channels and supply chains.”

With that market dynamic in mind, Ernst & Young said it has identified six “mega trends” that will impact the revenues, costs and profitability of participants in the global CV industry:

• Truck owners demand technology solutions enabling greater transparency into operations, vehicle and driver management

• Regulations force truck owners to change operating and buying behavior while driving 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 “glocalization” (creating local products and brands), expand presence across truck segments, and offer customized 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

• Globalization and economic uncertainties expose the commercial vehicle industry to supply chain, manpower and economic risks

“The commercial vehicle industry has bounced back strongly from the financial crisis with global sales expected to exceed three million units by 2016,” observed Jeff Henning, Ernst & Young’s global automotive markets leader.

“This buoyancy represents a major stage of evolution for the commercial vehicle industry and the auto industry as a whole,” he continued. “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 capitalize on the opportunities that lay ahead. The ability to innovate and be flexible in a constantly changing environment will be crucial for future success.”

Responding to the survey’s findings, Magnus Koeck, vice president of marketing & brand management for Volvo Trucks North America (VTNA) told FleetOwner that: “Long ago Volvo realized the risk of being dependent on only a few markets, so we expanded our presence and now manufacture in 19 countries-– at least one production facility on every continent-– and sell products in over 140 countries. Volvo has the largest geographic footprint of any truck make and is the only global truck brand. Now we’re seeing other OEMs follow a very similar path. It's good to have many different legs to stand on.

“Within the Volvo Group we have several different truck brands-- Volvo, Mack, Renault, UD Trucks and Eicher Motor-- that target different segments,” he continued. “Our different brands also operate in different countries and on different continents in order to fulfill the different customer needs in different segments. Sometimes our brands also co-exist in the same market. In North America we offer Volvo, Mack and UD.”

Addressing the first trend noted by Ernst & Young, Koeck said that “it’s absolutely true” that truck owners demand technology solutions enabling greater transparency. “It’s something Volvo Trucks identified many years ago in North America and in the rest of the world,” he elaborated. “We were very early to market with Volvo Link in North America and Dynafleet in Europe and other International markets. We recently launched Volvo's Remote Diagnostics, which is another step in our connected vehicle strategy.”

As to the mega trend that is regulations, Koeck noted that, “We believe it will be increasingly difficult for customers, some more than others, to continue spec’ing vehicles as they have in the past and still comply with regulations. We welcome cleaner, safer vehicles and have long been world leaders in these areas. Safety has been a Volvo core value since 1927, and care for the environment was adopted as a Volvo core value in the early 1970s.”

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