Where Are Commercial Vehicles Going?

Without stating the obvious and saying the warehouse or the Cash and Carry, the subject of where the commercial vehicle industry is going is an interesting one because gone are the days when we drive British-made commercial vehicles in the UK. Those vehicles that have some of the manufacturing process take place in the UK are not necessarily, made in the UK.

The Commercial Vehicle Megatrends India Show in February 2013 had some names involved that would surprise many UK businesses. Daimler India presented some interesting facts about the Indian trucking industry. As a section of the global industry located in one of the quickest developing markets, it is a good indicator as to where the industry should be going in terms of production, marketing and customer retention. India is undoubtedly experiencing incredible growth, but can it continue and should commercial vehicle manufacturers focus on TRIAD markets or BRIC markets?

Global Sales Statistics for Commercial Vehicles

The TRIAD market, which consists of Western Europe, North America and Japan, dominated global truck sales for much of the decade between 2000 and 2010, but the trend has shifted considerably towards the end of that decade and since. In the year 2000, truck sales in unit terms were 56% in the TRIAD countries and just 33% in the BRIC countries of Brazil, Russia, India and China, but by the year 2010 the balance had shifted considerably. In 2010, just 17% of global sales went to TRIAD countries, but BRIC countries accounted for 73% of all units sold.

The predicted commercial vehicle sales in the trucking sector are to be just 22% for TRIAD and 63% for BRIC countries by the year 2020.

The Balance of Power

It is not hard to see that the balance of wealth and productivity is shifting to developing countries and that begs the question about where our trucking industry will lead us in the decade following 2020. Are UK and Western European customers going to be limited to large shipping companies as our manufacturing and distribution network changes to accommodate only the multinational businesses that rely on profits from other parts of the world?

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Commercial vehicle sales in the UK could change to such a degree that there is very little market for large trucks and only smaller vans or sub-7.5 tonne vehicles will populate our highways, except for the goods shipped by the largest of companies. The reversion to manufacturing as cottage industries in the UK could mean that the demand for large vehicles would only suit an import market rather than a domestic network of large commercial vehicle dealers.

Not Such a Clear Future

Despite the implications suggested by Daimler’s statistics, the future of the truck industry in the developing world is not as clear as you might think. The downturn in demand for goods or at least the ability to pay for them in the TRIAD markets should cause a similar downturn in manufacturing and exports in BRIC countries.

This is not a new problem and governments have purposely weakened the value of their domestic currency to facilitate the need for a cheap export market and the availability of work for its citizens.  However, there is a point at which the rising number of people in the middle classes of BRIC countries will demand more for their money.

Victims of Success

The biggest problem that will affect commercial vehicle sales in both BRIC and TRIAD countries is not which country has the manufacturing and distribution demand, but which will be most affected by the rising cost of freight. According to the statistics published by Daimler at the Commercial Vehicle Megatrends India Show, India will be least affected by the cost of transporting goods by commercial vehicles long after other countries are forced to seek alternatives, despite not being a major oil producing nation.

Calvin Ford is a Surrey based statistician and has been studying marketing trends that affect the UK commercial vehicle trade. He has yet to encounter any supplier of vans, Surrey based or within the surrounding area, who would need to worry about it in the immediate future.

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