China, India, Africa and Indonesia Expected to Boost Sales of Mid-Market Value Trucks

[kscarbel2]

Trailer/Body Builders / November 20, 2015

The convergence of premium and low-cost trucks has led to the evolution of a mid-market segment, referred to as value trucks. Medium- and heavy-duty value trucks will emerge as the fastest-growing segment globally, with sales volumes of over a million units by 2022, with approximately 80 percent of these sales expected from China, India, Africa and Indonesia.

Of this, 70 percent will be from China and India, prompting original equipment manufacturers (OEMs) to focus on developing platforms for these two markets in the short-medium term. Additionally, OEMs to ensure the platforms feature attributes enabling global scalability in the long-term.

New analysis from Frost & Sullivan, Executive Analysis of Medium-Duty and Heavy-Duty Value Truck Market in Select Emerging Economies (http://bit.ly/1QeghNx), finds mid-market value trucks represent the most attractive sub-segment for platform development. By 2020, 75 percent of all value trucks built globally will be attributed to platform-based development and manufacturing.

“Global value truck OEMs and suppliers should realign product and service strategies to cater to the expanding mid-market,” said Frost & Sullivan Commercial Vehicles Program Manager Bharani Lakshminarasimhan. “Multi-pronged market strategies will fetch desirable results, as both the premium and value truck segments offer substantial opportunities for growth.”

MD-HD value truck OEMs are targeting the premium truck market through value re-positioning of products to lower the loss of market share to low-cost trucks. Additionally, MD-HD value truck OEMs must cater to fleet requirements for a low cost of ownership, strong safety features and high reliability to prosper in emerging markets.

“Creating value clusters through incremental technology advancements or enhanced sophistication of base platforms are key for optimal positioning in the MD-HD value truck market,” noted Lakshminarasimhan. “Therefore, MD-HD value truck OEMs should look at developing global platforms for low cost-centric markets and offer plug-in value solutions and services for market entry and growth.”

[kscarbel2]

Truck OEMs Aim for New Breed of ‘Low-Cost’ Models

Trailer/Body Builders / January 18, 2011

Research firm Frost & Sullivan has unveiled a detailed analysis of what it calls the “low cost truck” movement, a strategic initiative by truck manufacturers either individually or through joint ventures that will completely reshape the types of commercial vehicles used around the world.

“What we’re seeing is a determined effort to build trucks that cost 20% to 25% less in any given global market – from North America to Brazil, Russia, and Europe,” Sandeep Kar, global program manager--commercial vehicle research for Frost & Sullivan, told Fleet Owner. “And this effort will cover the entire commercial vehicle spectrum, from light- to medium- and heavy-duty models.”

For the study – titled Strategic Analysis of the Global Low Cost Truck Market – Frost & Sullivan interviewed OEMs and suppliers from around the world, conducted its own research, and then made near-term projections for the low-cost strategy spanning 2010 to 2016.

Kar said the firm’s research indicates new low-cost price ranges will develop as follows: $4,000 to $20,000 for a light commercial vehicle (LCV); $15,000 to $40,000 for a medium commercial vehicle (MCV); and $30,000 to $70,000 for a heavy commercial vehicle (HCV).

According to Kar, the impetus for this strategy on the part of truck builders is that commercial fleets are simply under far too much bottom-line pressure today – paying for higher fuel prices, the cost of regulatory compliance, higher pay to compete for workers – to afford ever-higher sticker prices on new equipment.

Dahlman Rose transportation economist Jason Siedl noted at FTR Associates’ annual freight outlook conference last September that the average cost for a new Class 8 tractor is up to $120,000 in the U.S. One fleet at that meeting said that its Class 8 tractor costs increased $25,000 per unit from 2002 to 2010.

It’s the financial pressure those high prices put on U.S. fleet owners that in turn is driving the effort to create low cost trucks, said Frost & Sullivan’s Kar.

“We expect to see phenomenal growth in the North American market for low cost trucks,” Kar pointed out. “Our research indicates the average base price point for a heavy-duty truck in North America is about $104,000. Now say some $10,000 to $15,000 worth of emission control and safety systems need to be added to the low-cost truck platform to bring it into regulatory compliance. You’d still be looking at a truck that is $80,000 to $95,000-- still cheaper than current prices today.”

Of course, such low- cost trucks would not contain the same amenities found on many of today’s commercial vehicles – especially in terms of driver-comfort specs. For that reason, Frost & Sullivan contends the North American truck market will become two-tiered, having a low-cost and a premium segment, with mid-priced models disappearing.

We would also not see the low-cost model challenge the long-haul Class 8 sleeper segment,” he noted. “Rather, we’d see the low-cost Class 8 model dominate the short-haul daycab segment.”

The key to making these low-cost trucks a reality, however, will rest on creating a far larger global manufacturing scale than exists now-- along with a global supplier network. “Making a low-cost truck means cutting costs throughout the vehicle,” Kar observed.

Per Frost & Sullivan, areas where costs will be cut include:

5% to 8% from powertrains

3% to 4% from chassis

3% to 4% from driver comfort and amenities

3% to 4% from engines

1% to 2% from marketing efforts

Overall, total production costs for a low- cost truck platform should fall anywhere from 19% to 29%, Kar said.

Yet can the low-cost trucks find willing fleet buyers in the U.S.? Kar definitely thinks so. “Total cost of ownership or ‘TCO’ is now the most critical metric within most fleets,” he explained.

“Access to financing is still limited and after the recent economic downturn, fleets still have little cash to spend,” Kar added. “In a way, fleets will almost be forced to look at low-cost truck models due to the operating conditions they will continue to face.”

[TeamsterGrrrl]

I suspect the players in this "value truck" market are looking to build trucks in volume at passenger car line rates, which equates to 200,000 trucks a year for a double shifted plant. Asia is a big enough market to absorb that kind of volume from a handful of manufacturers, especially if the cab is shared with everything down to 10 tons or so. Those markets have chosen a cabover, which may explain why Ford is positioning the Cargo where they are. But with North America being a conventional cab market, this leaves us the odd man out- 200k vehicles a year is the whole North American market in a slow year. Perhaps the industry will mimic Volvo and try to adapt a cabover into a bunch of conventional variants, then build them offshore to take advantage of cheap labor?

[kscarbel2]

Through decontenting, the North American market truck has been evolving into a value truck. Aside from the prerequisite EPA2010-required powertrain, they have become a much cheaper truck. The new cheaper-for-Paccar shared cab is one example.

[Dirtymilkman]

There's a large company here that has been running kw's for years. They get prototypes all the time to try out. They had these new paccar cabs for years already. 3 years is all they usually keep a truck and they are junk by then. All they do is pull local tankers but they're just stamped out junk.