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2020 Vision of Global Medium-Heavy Commercial Truck Market

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The global medium-heavy truck market, a leading indicator of economic activity, is undergoing tectonic changes and finding itself functioning in a flat world ecosystem. Sales volumes for this market …

The global medium-heavy truck market, a leading indicator of economic activity, is undergoing tectonic changes and finding itself functioning in a flat world ecosystem. Sales volumes for this market will come from emerging markets and margins from emerging technologies. Despite the market posting sluggish growth rates globally, Frost & Sullivan's most recent research focused on the global commercial vehicle industry, forecasts commercial vehicle sales to reach 4.6 million units by 2020.

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  • 1. 2020 Vision: Global Medium2020 Vision: Global Medium--Heavy CommercialHeavy Commercial Truck MarketTruck Market Smart, Green, and Connected Trucks to Drive Freight MobilitySmart, Green, and Connected Trucks to Drive Freight Mobility Improvements, and Industry RevenuesImprovements, and Industry Revenues Sandeep Kar,Sandeep Kar, Global Director Commercial Vehicle Research October 10, 2013 © 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  • 2. Today’s Presenter Sandeep Kar Global Director - Commercial Vehicle Research, Frost & Sullivan Follow me on: ca.linkedin.com/pub/sandeep-kar/1/942/958 2 10 years of global commercial vehicle technologies and markets expertise, which include particular focus on areas such as: - Global commercial truck industry growth opportunities, and market penetration and growth strategy development - Advanced truck technologies- powertrain, chassis, safety, telematics and regulation compliance technologies - Global research and consulting management, global business development and team-building, CXO level revenue and market share growth strategy development
  • 3. Top Commercial Vehicle Industry Mega Trends What can this mean for CV Industry? BRICs, Next 11, Africa Shift in Demand & Center of Gravity New Freight Routes New/Different Trucks Connectivity Beyond MRM URBANIZATION POLARIZATION 3 Digitalization The Box is Changing High Speed Rail Multi-modality Health, Wellness, Wellbeing New Focal Points POLARIZATION Source: Frost & Sullivan analysis.
  • 4. Global Logistics Spending—Urban vs. Non-urban Urban logistics spending is expected to reach $5.98 trillion by 2020, accounting for 46% of total logistics spending. Share of outsourced logistics will also rise in all regional markets. 2011 2020 In-house Outsourced In-house Outsourced Urban Logistics Spending, Global, 2011 and 2020 $5.95 70% $1.66 65% $0.89 35% $2.55 30% $7.02 54% $2.99 50% $2.99 50% $5.98 46% 4 Urban Non-urbanNote: Dollar amounts are in trillions 33% 55% 31% 39% 0% 10% 20% 30% 40% 50% 60% %ofLogistics Outsourced North America Europe Asia-Pacific Latin America Outsourced Logistics, Key Regions, 2012-2014 Source: Frost & Sullivan analysis.
  • 5. New Business Models in Logistics New Business Models Point Towards Changes in Commercial Vehicle Design and Operating Cycles New Business Models in Logistics Same-day deliveryConsolidation centers Robotic warehousesIn-store pickupLocker boxes 5 Source: Frost & SullivanImage source: Dreamstime, DHL, Shutl, Kiva, Kiala, Wal-mart, DHL consolidation center TNT Express locker boxes Shutl’s same-day model UPS-Kiala in-store pickup Kiva Systems robotic warehouses Examples of Logistics Service Providers Experimenting with New Logistics Models
  • 6. Global GDP and Commercial Truck Market Growth Outlook: Growth in BRIC and Next 11 economies will offer strength to global truck demand. Developed economies to start offering momentum from 2015 onwards. Region GDP Growth Estimates: 2012- 2022 (%) MCV Growth (CAGR%) HCV Growth (CAGR%) Overall CV Growth (CAGR%) Market Opportunity North America 2.1-2.5 4.3 3.6 3.9 Moderate South America 4–5 4.4 5.7 5.3 Moderate-High Europe 1.0–1.5 4.2 3.8 3.9 Moderate Global CV Vision 2020: World GDP and CV Growth Outlook—Global: 2012-2022 6 China 6.5–7.0 2.9 5.4 4.7 Moderate-High India 6.0–7.0 4.4 7.0 5.9 Moderate-High Russia 3.5–4 10.3 8.4 8.9 High Next 11 5–6 7.1 9.2 8.2 High RoW 4–5 8.4 8.2 8.3 High Global 4–4.5 5.1 5.7 5.5 Moderate-High Source: OECD, Frost & Sullivan analysis.
  • 7. 300 350 105.0 • Truck cycle peaks occur every 4th/5th year • Truck cycle peaks precede industrial production peak by a year • This correlation suggests that the next truck cycle peak could be in 2014 - 2015 followed by an potential economic upturn in 2016 Truck Buying Cycles vis a vis Economic Cycles New and used truck sales expected to peak in 2014 – 2015 resulting in an oversupply of used trucks over the 2015 – 2016 period Artificial boosters • Pre-buy activity • Regulation Compliance • Cheaper Trucks Strong Economy • Robust economic activity • Class 8 growth exceeded overall truck growth sales during much of the 1990s reaching its peak in 1999 IndustrialProductionIndex(2007=100) Class 8 Used Truck Market: Correlation Between Truck Buying Cycle and Industrial Growth, United States, 1998 - 2016 7 50 100 150 200 250 55.0 65.0 75.0 85.0 95.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 US Annual Industrial Production Index US Class 8 Actual Units Sold Used Class 8 Estimated Units Sold Source: Frost and Sullivan; US Federal Reserve No replacement • Increase in replacement cycle to 5 – 6 years • Slowdown of economy • Tremendous demand for used trucks Pent-up demand • Growth in US manufacturing and industrial production • Pent-up replacement demand • Short supply of MY ‘08 and ‘09 used trucks IndustrialProductionIndex(2007=100) UnitsSold(000s)
  • 8. Global Medium and Heavy Truck Market Forecast: Despite short-term global headwinds, stabilizing BRIC markets and rising Next 11 and African markets to elevate global MCV and HCV sales to 4.7 Million by 2022 2022 Regional Shares Global CV 2020 Vision: Unit Shipments—Global: 2012–2022 ~2.7 million ~4.6 million 5.5% CAGR Growth 24% 34% 36% Units 8 Note: All figures are rounded; the base year is 2012. Source: Frost & Sullivan analysis. 44% 31% 42% 21% 45% 53% 64% 55% 69% 76% 58% 72% 79% 55% 47% 66% Next 11 includes the following countries: Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, Vietnam, and Bangladesh. Units MCV: 6T to 16T HCV: 16T and above 28%
  • 9. Growth Market Focus—Next 11 Markets Indonesia, Turkey, and Mexico Offer Strong Growth Potential Through the Forecast Period, as these Economies Experience Rapid Economic Development, Leading to Freight Movement Expansion 10.4% 6.6% 11.5% Global CV Vision 2020: Unit Sales Forecast—Next 11: 2012-2022 UnitSales Indonesia is set to experience doubling of truck demand by 2018. Rapid urbanization will drive the market for commercial vehicles. Mexican CV demand set to triple over the 2011 to 2018 period. Economic growth and rise in construction activity, coupled with need for replacement of aging fleet vehicles, is driving growth. Turkey’s fast modernizing economy will establish the country as a critical center for production and sales of trucks. 9 Note: All figures are rounded; the base year is 2012. Bangladesh data is not present, owing to lack of availability at the time of publication of this study. Source: Frost & Sullivan analysis. UnitSales
  • 10. African Medium and Heavy Truck Market Forecast: South Africa, Algeria and Nigeria to Lead African Truck Market; Low-cost Product Line, CKD Assembly and After Sales Support are Key Entry Strategies for OEM 2022 Country Shares Global CV Vision 2020: Unit Sales Forecast—Africa: 2012–2022 ~84,000 ~152,0006.2% YoY Growth 66% 64% UnitSales 10 Note: All figures are rounded; the base year is 2012. Source: Frost & Sullivan analysis. 53% 51% 66% 41% 74% 66% 73% 68% 62% 38% 47% 49% 59% 26% 34% 27% 31% 36% The category of Others includes Botswana, Namibia, Zambia, Zimbabwe, Angola, Mozambique, and the rest of Africa. 34%
  • 11. Price($) Global CV Vision 2020: Highest-selling Weight Segment in Each Region—Global: 2022 Attractive Segment by Region—2022 The 22 to 27 MT Segment to Emerge as Most Attractive Among Trucks Globally at a Price Band of $45,000 to $75,000 11 GVWR (kilogram) Price($) Size of the bubble: Sales units of top segments in each country in 2022. Note: All figures are rounded; the base year is 2012. Source: Frost & Sullivan analysis.
  • 12. Vehicle Platform Strategies of Key Global HD OEMs: By 2020, 29 Global HD Truck Platforms are Expected, with Individual Regional Products Built with up to 70% Localized Components 58 57 29 OEMs whose global strategy was in early stages of execution in 2012 are expected to show more pronounced, platform-based product development as they expand geographically. NumberofPlatforms(Units) Global CV Vision 2020 : Heavy-duty Truck Market: Key Truck Platforms—Global: 2012 and 2022 12 24 29 Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis. NumberofPlatforms(Units) Year Note: Within the split Auman GTL, and MAN SITRAK platforms are accounted to both individual OEMs involved, but are counted only once for computing the total.
  • 13. Low-cost Truck Market (Global): Over 21 key global low-cost MCV-HCV model ranges are expected to be introduced by global OEMs by 2016; Low-cost trucks dominating markets such as Africa, Next 11 where Chinese and Indian OEMs are finding sweet spots HCV 2009 2016 14 MN 25/40 U-Truck Sinotruk Howo Daimler Bharat Benz IVECO LC HCV Sinotruk HuangHe Hyundai HD DongFeng DFL GAZ-FAW HD 2013 Kamaz LCT HD VolvoDongFeng LCT HD Global CV Vision 2020: Low-cost Truck Model Timeline—Global: 2009–2016 13 MCV 21813 7 Source: Frost & Sullivan analysis TATA Prima AsiaMotorWorksMAN Force Volvo-Eicher VE DongFeng Duo IVECO’s Chinese Platform Based MD Daimler Brand X MD GAZ 3309c Fuso FG LCTISUZU FTR
  • 14. Top CV Technologies- Global Outlook: OEMs to Increasingly Focus on Advanced Powertrain, Safety, Telematics, and Cabin Systems for Diversified Leadership Across Segments and Geographies Region CV Technologies Natural Gas Hybrid-Electric Engine Downsizing Low Cost Truck Safety Systems Telematics Infotainment and HMI North America South America Global CV 2020 Vision: Top CV Technologies Outlook—Global: 2012–2022 14 Europe Russia China India Strong Trend Towards 2022 Moderate Trend Towards 2022Market in 2012 NA Source: Frost & Sullivan analysis.
  • 15. Global MCV and HCV Market—Powertrain Technology Forecast China and NA to Show Greater Preference Towards Advanced Powertrain Systems; NG to Emerge as Fastest Growing Powertrain Technology Across Regions Global CV Vision 2020: Powertrain Technology Split by Region—Global: 2022 Percentage 15 Note: All figures are rounded; the base year is 2012. Source: Frost & Sullivan analysis. Next 11 includes the following countries: Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, Vietnam, and Bangladesh. Percentage
  • 16. Smart Connected Trucks : Rising Importance of Supply Chain Optimization Will Drive Fleets’ Clients and Hence Fleets Towards Greater Connectivity Stoking Telematics Adoption for Urban Freight Mobility Mobile Resource Management Security/Safety Management Track and Trace, HAZMAT, Geofencing, Stolen Vehicle Tracking, Critical Event Alerts, Operations Management Back Office Automation, Scheduling, Dispatching, Delivery Confirmation, Billing, Insurance Risk Management 16 Mobile Resource Management Driver and Vehicle Connectivity Over Cellular and Wi-Fi Networks, Two-way Communication, V2I+V2V Communications, EOBR, HOS, Electronic Vehicle Inspection, Handheld Device Connectivity Smart Navigation Dynamic Navigation, Geofencing, Telematics Based Fuel Consumption Optimization, Green Routing, Electronic Toll Collection, Real-time Parking Fuel Optimization Fuel POI Tracking, Charging Station/Battery Swap Facility Location, Fuel-Tax Filing Vehicle Uptime Maximization Remote Diagnostics, Prognostics Source: Frost & Sullivan analysis.
  • 17. Telematics FMS Opportunities by Country: Growing Demand in North America, Europe, Russia, Brazil, and South Africa; Middle East, APAC, Certain Next 11 Countries and India Projected to Show High Degree of Adoption Beyond 2015. 1 2 3 6 7 Potential Countries Qualcomm, Microlise, FleetBoard, Dynafleet, Tom Tom, Masternaut, Transics, Qualcomm, Microlise, FleetBoard, Dynafleet, MixTelematics, Trimble, Novacom, Schmitz Cargobull, IDEM-Krone, and others China GPS, Ltd.; FleetBoard; Navman Mobiliz, Arvento, Vektor, Infotech, Solit, Satko, Pergo, and others 17 5 4 2 3 4 5 6 71 North America Europe Russia Brazil South Africa Middle East Asia Source: Frost & Sullivan analysis. FleetMatics, Actsoft, SkyBitz, Qualcomm, Trimble/PeopleNet, XATA, Teletrac, WebTech Wireless, Telogis, Network Fleet, FleetMatics, Actsoft, SkyBitz, ID Systems, and others MixTelematics, Digicore, Netstar, Tracker, and others Beyond 2015 Autotrac, Zatix, Onixsat, WirelessCar, and others FleetBoard; Navman Wireless; Trimble; and others Arya Omnitalk, eLogistics, CMC others Arya Omnitalk, eLogistics, CMC Limited, Pricol, Mahindra Telematics, Ashok Leyland, Trimble, iTrack, MobiApp, and others
  • 18. Common Multiplexed Architecture Across OEMs Laying Out a Common Advanced Electrical and Electronics Platform Will Provide Clear Boundaries for Integration of Electronics in Cabins; This Will Emerge as a Key Foundation for Future Cabin Design Strategies Need for Robust, Effective and Efficient Electronics, Communication and Networking Architecture Infotainment Regulation Compliance Telematics Connectivity Safety System Integration Development of architecture in compliance with SAE Enables seamless communication between vehicle and devices Single standardized platform will streamline product Global CV Vision 2020: Common Multiplexed Architecture, NA-EU, 2012-2020 18 OBD OBD – On-Board Diagnostics; HVAC – Heating Ventilating and Air-Conditioning HMI – Driver Comfort & Convenience Controls Handheld / Personal Device Connectivity HVAC Powertrain Control Chassis Control compliance with SAE standards. J1939, J1708, CAN, LIN etc - vehicle bus protocol used for communication and diagnostics among vehicle components MULTIPLEXED ARCHITECTURE product development for OEMs and Teir1 suppliers Since, necessary infrastructure is available, new devices addition will not require discrete system integration and customization IEC 60068, ISO 16750 Source: Frost & Sullivan analysis.
  • 19. Global MCV-HCV Truck Safety Systems Adoption Hot Spots ABS, ESC, and Active Braking Technologies to Gain BRIC and Next 11 Adoption; While Mature Markets (e.g. NA, EU, etc.) to Increasingly Adopt Telematics Based Integrated Safety Systems R.O.I. and Initial Acquisition Cost R.O.I. and Initial Acquisition Cost DriverDriver Effectiveness of Technology Effectiveness of Technology R.O.I. and Initial Acquisition Cost Driver Effectiveness of Technology Global CV Vision 2022: Safety Technology Hot Spots: 2012-2022 Expected Key Decision Factors for Safety Technology Selection NA Europe Russia China 19 Driver Acceptance Driver Acceptance Technology Interface Integration Technology Interface Integration LiabilityLiability RegulationRegulation Driver Acceptance Technology Interface Integration Liability Regulation Source: Frost & Sullivan analysis. ABS Stability control systems Tire Pressure Monitoring Vision Based Systems Integrated Safety System Telematics Enabled Safety SA India Africa Next 11 RoW
  • 20. Top 5 Predictions and Trends Key Predictions- 2012-2022 • Global medium-heavy truck sales to 4.6 million; 70 % higher than 2012 sales. • Over 40 Percent of all medium-heavy trucks manufactured globally will feature platform based lineage 20 • Sales of CNG/LNG and hybrid/electric enabled trucks to account for over 500,000 units • BRIC, Next 11, Africa, and Rest of World Market to Provide 75 Percent of Sales Growth Volume; TRIAD markets to offer the rest 25Percent growth momentum • Competition between Daimler and Volvo to intensify as both aim for deeper and wider penetration in BRIC, Next 11, and RoW markets. Collective market share to reach 23 Percent of global market Source:, Frost & Sullivan analysis.
  • 21. Top 5 Predictions and Trends (..contd.) Key Trends- 2012-2022 • NG to Emerge as a Key Fuel of Future: NG to be most sought after advanced powertrain technology. Global NG penetration to reach 8.5 % by 2022 • Low-cost to Best-cost: Low cost truck platform development will become a must for OEMs to stay competitive as global industry centers shift from NA-EU to BRIC and beyond 21 • Beyond BRIC: Focus to shift beyond BRIC, Next 11, Africa and Other markets to emerge new battle field for Global OEMs • Platforms for Profits: Developing global platforms and increasing segment/ regional sharing of sub- systems will drive sustained profits in the long term • Smart is New Green: Supply chain optimization will drive fleets and clients in improving overall efficiency of operations stoking demand for safe, connected and intelligent truck systems
  • 22. Market Engineering Methodology One of Frost & Sullivan’s core deliverables is its Market Engineering studies. They are based on our proprietary Market Engineering Methodology. This approach, developed across 50 years of experience assessing global markets, applies engineering rigor to the often nebulous art of market forecasting and interpretation. 22 of market forecasting and interpretation. A detailed description of the methodology can be found here. Source: Frost & Sullivan research.
  • 23. Next Steps Develop Your Visionary and Innovative Skills Growth Partnership Service Share your growth thought leadership and ideas or join our GIL Global Community 23 Join our GIL Community Newsletter Keep abreast of innovative growth opportunities Phone: 1-877-GOFROST (463-7678) Email: myfrost@frost.com
  • 24. Your Feedback is Important to Us Growth Forecasts? Competitive Structure? What would you like to see from Frost & Sullivan? 24 Emerging Trends? Strategic Recommendations? Other? Please inform us by “Rating” this presentation.
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  • 26. For Additional Information Jeannette Garcia Corporate Communications Automotive & Transportation (210) 477-8427 Jeannette.garcia@frost.com Sandeep Kar Global Director Commercial Vehicle Research (416) 490-7796 Sandeep.kar@frost.com 26

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