BRICs Bring Impact to North American Commercial Vehicles

January 14, 2019


The consulting company Alix Partners recently released the 2010 Global Commercial Vehicle Outlook (AlixPartners 2010). The following is an excerpt of the contents of the challenges faced by commercial vehicles in North America.

The BRIC countries, especially China, will become the main growth market for commercial vehicles worldwide

It is estimated that by 2014, the global commercial vehicle production will increase by 1.8 million, of which 44% will increase from the BRIC countries and 36% from China.

In fact, in 2009, the production of commercial vehicles in the BRIC countries reached 1.1 million, accounting for 64% of the global total. Among the BRIC countries, China’s output accounts for 49%.

In 2009, global commercial vehicle production fell by 29%, while China’s output increased by 22%.

Figure 1: Production forecast for medium-sized and heavy-duty commercial vehicles (greater than 6 tons) in the BRIC countries (Russia, Brazil, India, China), outside Russia, and North America

Unit: Thousands

Challenges and Opportunities for Commercial Vehicle Manufacturers in North America

By 2014, commercial vehicle manufacturers in North America will not be able to compete with low-cost commercial vehicle manufacturers in emerging markets and will lose half of the global market share.

After experiencing the impact of the decline in commercial vehicle production in 2009, the production of North American commercial vehicle manufacturers has begun to recover, and is expected to return to 2008 levels within the next two to three years. In 2010, the output of North American Class 8 trucks (trucks with gross vehicle weights above 14969 kg) will increase by 25% to 150,000 vehicles.

However, North American commercial vehicle manufacturers are now being attacked by emerging market automakers and European competitors. Among them, emerging market car companies have accounted for two-thirds of global truck production. And European competitors have taken the first steps to form partnerships with car companies in these low-cost countries.

In the next four years, the output of commercial vehicle manufacturers in China, India and Russia is expected to further increase by about 50%. This part of the growth demand comes partly from their own domestic markets and partly from other emerging markets such as Southeast Asia, Africa, the Middle East and Central America.

North American commercial vehicle manufacturers have not grasped the growth needs of emerging markets, mainly because of:

1) The product is inconsistent with the needs of emerging markets;

2) Lack of local partners;

3) The cost is too high.

In the BRIC countries and other emerging markets, the demand for "middle-range" trucks is growing. Take the Chinese market as an example. By 2015, the share of low-end trucks of Chinese domestic manufacturers will drop to 67%, while the share of “middle-end” trucks will increase to 30%.

Figure 2: Forecast of growth prospects for low-, medium-, and high-tech trucks in China

For North American companies, it is an urgent and important task to gain a firm foothold in the “middle end” markets of these countries. But this is also a very difficult task because the cost of "middle-range" trucks in these low-cost countries is still 40 to 50% lower than that of North American-made general trucks, and there are no European and American joint venture partners in China, India and Russia. The number of local commercial vehicle companies has become less and less. Therefore, North American companies must “fight” and take their own necessary measures to reduce the cost of products in emerging markets. Otherwise, they may lose half of the global commercial vehicle market, thus losing the company’s long-term development opportunities.

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