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ATA MC&E 2015 Wallace Lau, Frost & Sullivan

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Overview of future truck from global OEM perspective

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ATA MC&E 2015 Wallace Lau, Frost & Sullivan

  1. 1. 1ND32-18 Strategic Outlook of Global Commercial Vehicle Industry Trends and Impact on ATA Members Executive Presentation Wallace Lau Senior Industry Analyst- Commercial Vehicle Research
  2. 2. 2ND32-18 2014–2015 CV Industry Senior Management Top-of-Mind Issues 0 1 2 3 4 5 Last frontiers of globalization- Next 11, Africa Fuel price volatility Rising relevance of North America for manufacturing and sales Proliferation of electronics and big data Urban logistics, bricks-and- clicks, and multi-modality Autonomous driven connected trucks Service and maintenance revenue focused business models New truck types (e.g. mega- trucks, city trucks, etc.) and pricing models Note: Data collected from 2013-2014 interviews and discussions with Sr. Manager to CEO level executives of truck OEMs and tier-1 suppliers in NA, EU, APAC, China, India, Latin America and other regions Source: Frost & Sullivan analysis. Global CV 2015 Vision: Senior Executive Top of Mind Issues, Global, 2014-2015
  3. 3. 3ND32-18 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 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 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. Global CV Vision 2020: World GDP and CV Growth Outlook—Global: 2012-2022 Source: OECD, Frost & Sullivan analysis.
  4. 4. 4ND32-18 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 North America South America China India Russia Europe Next 11 RoW MCV HCV 2013 2022 Regional Shares Note: All figures are rounded; the base year is 2012. Source: Frost & Sullivan analysis. Global CV 2020 Vision: Unit Shipments—Global: 2013–2022 2022 ~2.7 million ~4.6 million 5.5% CAGR Growth 44% 31% 24% 42% 21% 45% 53% 34% 36% 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. MCV: 6T to 16T HCV: 16T and above 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 4.6 Million by 2022 28%
  5. 5. 5ND32-18 North America South America China India Russia Europe Next 11 RoW 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 5000 10000 15000 20000 25000 30000 35000 GVWR (kilogram) Price($) Global CV Vision 2020: Highest-selling Weight Segment in Each Region—Global: 2022 Size of the bubble: Sales units of top segments in each country in 2022. Attractive Segment by Region—2022 The 22 to 27 Ton GVWR Segment to Emerge as Most Attractive Among Trucks Globally at Price Band of $45,000 to $75,000 Note: All figures are rounded; the base year is 2013. Source: Frost & Sullivan analysis.
  6. 6. 6ND32-18 ~2.7 million ~4.6 million Global Medium and Heavy Truck Market Forecast: China and NA to show greater preference towards advanced powertrain systems; NG to emerge as fastest growing powertrain technology across regions Global Medium-heavy truck sales to reach 4.6 million by 2022 2022 – Powertrain Mix Segment: GVWR 6T and above NG fastest growing powertrain in trucks globally Global CV Vision 2020: Powertrain Mix, 2022 2013 2022 0% 20% 40% 60% 80% 100% World NA SA China India Russia Europe RoW Gasoline 1.4 6 1 0.5 0.1 0.3 0.1 2.1 HEV 3 4 1.3 4.9 0.6 1 4.6 0.6 NG 8.9 16.8 6.4 10.2 6.3 7.45 8.25 4.4 Diesel 86.7 73.2 91.3 84.4 93 91.25 87.05 92.9
  7. 7. 7ND32-18 Global Engine Displacement and Power Recalibration: Dominant Narrative in Diesel Technologies in Engine Downsizing in Developed Markets Contrasted Against Engine Upsizing in Developing Markets 12 12.2 12.4 12.6 12.8 13 13.2 13.4 13.6 13.8 14 14.2 14.4 14.6 14.8 15 2011 2018 ~ 3% reduction 11 11.2 11.4 11.6 11.8 12 12.2 12.4 12.6 12.8 13 13.2 13.4 13.6 13.8 14 2012 2018 ~ 3 % reduction Truck Engine Power Bandwidths, China, 2010 and 2020 2010 2020 100 300 400 500 Power (kW)700 MDT LDT 200 kW 100 kW 60k W HDT 220 kW 400 kW 350 kW HDT 600 kW MDT 300 kW 140 kW (Medium-High Duty) LDT 80 kW 200 600 HD Truck Diesel Engine Displacement Overview, North America, 2011 & 2018 HD Truck Diesel Engine Displacement Overview, Western Europe, 2012 & 2018 While there is noticeable downsizing trend in both North America and Europe truck engine markets (especially in the HD segment); the emerging markets (in particular China as shown here) on the other hand are expected to experience up-sizing. 13.7 – 14.1 13.4 – 13.7 12.3 – 12.7 11.9 – 12.3 Weightedaveragedisplacement(inL) Weightedaveragedisplacement(inL) Note: All figures are rounded. Source: Frost & Sullivan analysis.
  8. 8. 8ND32-18 7 4 7 4 8 3 7 3 6 3 5 4 3 3 3 3 2 1 2 2 7 2 7 3 6 3 6 3 6 2 5 2 4 1 5 1 5 2 5 2 3 1 4 2 3 1 3 2 0 10 20 30 40 50 60 70 Observed no. of distinct platforms, 2013 Estimated no. of global platforms available, 2013 Observed no. of distinct platforms, 2020 Estimated no. of global platforms available, 2020 Beiqi Foton Dongfeng Motor Corp. CNHTC Ashok Leyland TATA Motors Navistar Inc. PACCAR Inc. IVECO Scania AB MAN SE Volvo Group Daimler Group 58 24 57 29 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 in Certain Markets Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis. OEMs whose global strategy was in early stages of execution in 2013 are expected to show more pronounced, platform-based product development as they expand geographically. 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. Global CV Vision 2020 : Heavy-duty Truck Market: Key Truck Platforms—Global: 2013 and 2020
  9. 9. 9ND32-18 7 8 6 3 2 7 6 6 4 5 3 3 4 3 3 3 1 2 3 2 1 2 1 1 7 7 5 3 2 7 6 5 5 5 4 3 4 3 4 3 2 3 3 2 1 2 2 2 0 1 2 3 4 5 6 7 8 9 Daimler Group Volvo Group MAN SE Scania AB IVECO PACCAR Inc. Navistar Inc. TATA Motors Ashok Leyland CNHTC Dongfeng Motor Corp. Beiqi Foton Observed no. of distinct platforms, 2011 Estimated no. of global platforms available, 2011 Observed no. of distinct platforms, 2018 Estimated no. of global platforms available, 2018 Heavy-duty Truck Market: Key Truck Platforms by OEM, Global, 2011 and 2018 Average no. of distinct platforms, 2011 Average no. of global platforms, 2011 2.2 5.0 Source: Frost & Sullivan analysis. Leading OEMs Expected to Consolidate Regional Platforms and Launch New Multi-national Platforms, Thereby Increasing the Number of Global Platforms Going Forward OEM Numberofplatforms(Units)
  10. 10. 10ND32-18 How OEMs Will Differentiate Their Brand in the Future All major OEM R&D focal points indicate automated mobility as a strategic priority and a key brand differentiator. POWERTRAIN EFFICIENCY SERVICE & MAINTENANCE ADVANCED SAFETY SUSTAINABILITY & ENVIRONMENT AUTOMATED MOBILITY QUALITY & RELIABILITY COMFORT & CONVENIENCE COST OF OWNERSHIP CONNECTIVITY & SMART HEALTH & WELLNESS PRE 2000 TODAY FUTURE Source: Frost & Sullivan
  11. 11. 11ND32-18 Autonomous Commercial Vehicle Incremental Cost Analysis While the cost of ingredient technologies will vary between 2014 and 2025, the total incremental cost for the autonomous driving technology module in heavy-duty trucks will not decline by more than 10%. 6% 41% 39% 6% 8% 2025 Telematics/Connectivity HMI Algorithms/IT Driveline Sensors Key: HMI = human-machine interface; IT = information technology. Source: Frost & Sullivan Cost ~$20,000 Cost ~$18,000 2014: ~$2,000 2025: ~$1,000 Autonomous Heavy-duty Truck Market: Incremental Cost Analysis, Western Europe and North America, 2014 and 2025 Sensors 2014: ~$10,000 2025: ~$7,500 Driveline 2014: ~$1,000 2025: ~$1,000 HMI 2014: ~$5,000 2025: ~$7,000 Algorithms/IT 2014: ~$2,000 2025: ~$1,500 Connectivity 10% 50% 25% 5% 10% 2014 Telematics/Connectivity HMI Algorithms/IT Driveline Sensors
  12. 12. 12ND32-18 Automated Driving Benchmark Truck OEMs have the capability to create semi- or highly automated vehicles today. The biggest challenge is taking the driver out of the loop and providing a robust business case for fleet adoption. Level of Automation Level 1 Level 2 Truck Platooning Level 3 Level 4 Enabling Technology None Electric power steering (EPS), electric braking systems (EBS), electronic throttle control, adaptive cruise control (ACC), advanced driver assistance systems (ADAS) V2X, DSRC, integrated safety systems (ISS), cameras, sensors, ACC Intersection assist, redundancy backup for connectivity, self-driving capability until driver takes over control Multiple redundancies (hardware) and artificial intelligence (software) Incremental Cost $0 $5,000–$10,000 $5,000–$10,000 $20,000–$25,000 $30,000 + Year Expected Today ~2015–2020 ~2018–2020 ~2025–2030 ~ 2035 + Distance/ Duration of Automation None Low Moderate Moderate-High High Driver Involvement Very High High Moderate Moderate-Low None Vocation Application (Long-haul, Regional, Vocational) All Long-haul Regional Vocational Long-haul Regional Vocational Long-haul Regional Vocational Long-haul Regional Vocational Autonomous Heavy-duty Truck Market: Levels of Automated Driving, Western Europe and North America, 2014 Source: Frost & SullivanHigh Medium-High Medium Low
  13. 13. 13ND32-18 Key Implications on Human Factors Autonomous driving technologies could significantly affect the trucking industry, especially regarding driver shortages, driver performance, and driver safety. Driver-related Fuel Efficiency Driver Wages Recruiting Drivers Driver Performance Productivity Retaining Drivers Driver Safety Source: Frost & Sullivan Level 4 Automation
  14. 14. 14ND32-18 Snapshot of Global Automated Truck Adoption, 2025 and 2035 In 2035, an estimated 182,031 autonomous-enabled trucks will be commercially sold for on-road applications globally, up from 7,970 units in 2025. # Source: Frost & Sullivan North America Japan1 Rest of World7 Russia5 Europe2 3 ~2,700 ~2,400 (36.7%) ~2,800 ~8,500 ~10,200 Level 2 Level 3 109,000 200,1163,160 25,664 0 306 2025 2035 Level 4 Ranking by government support of autonomous commercial vehicle technology Note: No level 4 commercial vehicles are expected in 2025 globally Australia4 Legend 162,450 259,692 3,610 40,863 0 1,910 2025 2035 69,324 152,7600 21,386 0 0 2025 2035 15,750 23,800 700 3,850 0 350 2025 2035 237,313 565,212 0 84,782 0 0 2025 2035 China6 17,500 26,000 500 1,400 0 0 2025 2035 60,000 203,171 0 1,528 0 0 2025 2035671,337 7,970 0 2025 Total Market ~ 679,307 1,430,751 179,465 2,566 2035 Total Market ~ 1,612,782 Autonomous Heavy-duty Truck Market: Automated Truck Adoption, Global, 2025 and 2035
  15. 15. 15 Why the Connected Truck is Important in Future ? Telematics will turn the truck into a ‘value truck’ through an ecosystem of customer-centric services and applications Globally 35 Million LMH Trucks to be Connected by 2020 Strong Push from Fleet Operators Future Trucks Can be Used as Payment Solution High Value Proposition for All Eco-System Partners Integrated Mobility – Connected Living
  16. 16. 16 New FMS Vendors Evolving – Increasingly Crowded Ecosystem Consolidation is the key force driving this trend. Software and Application Providers
  17. 17. 17ND32-18 Big Data Analytics Potential Savings for OEMs and Fleets: Leveraging big data & analytics total potential savings per long-haul truck per year is ~ $ 4,286. Product Development & Manufacturing Marketing & Sales Warranty & Quality Fuel & Route Optimization Usage Based Insurance Prognostics/ Predictive Maintenance 6 - 20 % 8 - 17 % 7 - 15 % 17 - 25 % 10 - 25 % 7 – 30% Estimated Potential Savings by Function Estimated Potential Savings for a Fleet Note: Values obtained from primary & secondary research Source: ; Frost & Sullivan Executive Analysis of Big Data in Commercial Vehicles , Potential Savings , Global, 2014
  18. 18. 18ND32-18 Uber for Trucks is Here- Cargomatic, Transfix, etc.- Big Data Leveraged by Small Devices Several Leading OEMs Are Already Emerging as Stake Holders 25 Trucks, 25 Loads, One Day= 1,725 Empty Miles, Driver Fatigue, Traffic Congestion With Automated Matching System Empty Miles Reduced to 272, Less Tired Drivers, Less Traffic, Happy Shippers, Happy Fleets If you scale this up to 2 Million Trucks in US that drive through US cities each day about 12 Billion Empty Miles Can be Reduced
  19. 19. 19NEF9-18 Currently Evaluated Pricing Model Shift from no upfront investment model to profit sharing model; 2014 will see few players evaluating various ways to get this started, though it will take another 3 years to be launched High upfront investment with low monthly service fee – fleet operator buys hardware for a set fee and pays low monthly subscription fee Profit sharing model - Sharing of cost savings with fleet management vendor (for example; for every ‘X’ per cent of cost savings achieved by using the vendor’s fleet management solution, they get paid about ‘X’ per cent of that cost saving) Low High Low High Low High Hardware Monthly Subscription Fee No upfront investment with high monthly service fee – hardware is offered as free; vendor recovers the hardware cost with high subscription fee Low hardware cost and service cost Low hardware cost but high service cost High hardware cost but low service cost Currently evaluated only in ‘matured’ markets
  20. 20. 20NEF9-18 Driver Mgt. Fuel Mgt. Vehicle Management Order Management Warranty Optimisation Prognostic & Repair Management Driver Behaviour and Training Advanced Driver Assistance System Integration Usage based Insurance Automated Driving / Platooning Transport Management - TMS ENVIRONMENTSAFETY ACCESSIBLE AFFORDABLE RevenueGenerationProfitGenerator Evolving Service Opportunity Business model of connected truck is like an “Iceberg”; most important revenue generators are not yet seen $3.5 Billion Today
  21. 21. 21 Here, Now, and Future of Connected Fleets Fleet telematics growth likely to be aggressive and active. •Safety & Security •Fuel •Vehicle Diagnostics •Maintenance & Service •Order Management •Driver Behavior •Video Surveillance •Prognostics •UBI •Driver Simulators •Business Intelligence (using big data) •Platooning (Semi- Autonomous) •Dealership network integration •Mobile Freight Brokering •Speedy Road/Load Testing •Intermodal Logistics IntelligentMobilityforPeople&ForGoods
  22. 22. 22ND32-18 Contact Wallace Lu Senior Industry Analyst Commercial Vehicle Research Direct: 416.490.0813 Fax: 416.490.1553 Email: wallace.lau@frost.com

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