Global Developments and Their Implication on the European Commercial Vehicles Market - Emerging Economies and Advanced Technology Roadmaps - Frost & Sullivan Press Release
PRESS RELEASE Legislations and Technological Changes Govern European Commercial Vehicles Market Growing Focus on Addressing Safety and Environmental Concerns through Superior Vehicle Design London, UK – 7 December, 2005 - Rapid globalisation is creating numerous changes within the European commercial vehicles (CV) market with all the major original equipment manufacturers (OEMs) increasingly consolidating among themselves in the search for greater market share and improved global presence. OEMs’ focus is increasingly on building technologically superior vehicles that provide differentiation and thereby, a competitive edge. “Frost & Sullivan believes that the European CV market will see immense technological advancement and that the industry structure will undergo tremendous changes,” comments Frost & Sullivan (http://transportation.frost.com) Research Analyst Malavika Srinath. “These changes are a result of legislations and technological developments that the market has seen over the past five years.” Major legislations on road freight, vehicle safety and the environment are set to have a huge impact on vehicle and engine design. Due to an imbalance in the modes of transport used – companies transport a majority of goods by road rather than sea or rail – the European Union (EU) issued a white paper in 2001 with the aim of correcting this disparity. This white paper suggested revitalising other modes of transport while making targeted investments in building a trans-EU network involving several different forms of transportation. Nevertheless, intermodal transportation is impossible without road transport playing an active role since it allows, for example, point-to-point delivery unlike other means of transport. “Despite numerous regulations, the road freight sector is expected to grow, with the market projected to reach 1,605 billion tonnes km and revenues expected to increase to €389 billion by 2012,” notes Ms. Srinath. “This can only spell good news for CV manufacturers.” However, other road-related issues such as worsening congestion, safety concerns and damage to the environment are forcing governments to revise their transport legislations. These new regulations are driving the growth of congestion charging systems and will also help ensure that all CV manufacturers equip their vehicles with safety systems as well as with fuel-efficient and environment-friendly engines. The total market for safety systems is set to grow from €365.9 million in 2004 to over €406 million by 2012, largely due to the introduction of new active systems. These will experience increased demand while passive systems have become comparatively mature. While legislations are driving the development of security systems such as hybrid engines and Selective Catalytic Reduction (SCR) technology, customer demand for functional digital vehicle capability is fuelling vehicle design enhancements such as ’cockpit modules’. Environmental charges against the automotive industry are rising, especially in the case of CVs as their engines are less developed than those of passenger cars. This indicates a promising future for emission technologies with projected revenues of €253.3 million by 2014 in Europe. Manufacturers have developed new CV engine technologies in vehicles of over 6 tonnes and several emission control technologies in vehicles of 7.5 tonnes and above. However, the high cost of these technologies restricts their installation in CVs. Moreover, the CV market is typically slower to adopt new technologies and superior vehicle designs than the passenger vehicle segment. For example, OEMs and suppliers do not expect steer-by-wire systems to enter the European CV market before 2018, although features such as Lane Departure Warning (LDW) systems have already entered the light commercial vehicles (LCV) segment. “This is, therefore, the most critical challenge facing the CV market,” notes Ms. Srinath. “A higher level of adoption of commercial vehicle technologies is required for vehicles to become safe and environmentally sound as well as for car makers to comply with ecological legislations.” Another significant challenge springs from the increasing eastward shift of European OEMs looking to reduce their operating costs. Outsourcing manufacturing processes to Asia and other emerging economies presents substantial cost savings, helps consolidate global presence and gives European OEMs access to a huge and untapped customer base. However, emerging economies present both an opportunity and a threat to European OEMs. Low operating costs and increasing industry expertise combined with supportive government policies place them in a highly favourable position to eventually overtake the EU market. For now, these markets are extremely dependent on the EU market for technological superiority and foreign direct investment and are unlikely to overtake it in the near future. 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Title: A Strategic Analysis of Global Developments and Their Implication on the European Commercial Vehicles Market - Emerging Economies and Advanced Technology Roadmaps Code: B831- 18 Background Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community, by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics. Media Contacts: Europe: Magdalena Oberland Corporate Communications P: +44 (0) 20 7915 7876 E: magdalena.oberland@frost.com Americas: Tolu Babalola Corporate Communications P: 210.477.8427 E: tolu.babalola@frost.com Asia Pacific Donna Jeremiah Corporate Communications P: +603 6304 5832 E: djeremiah@frost.com India: Surbhi Dedhia Corporate Communications P: +91 22 2832 4705 Ext: 131 E: sdedhia@frost.com Australia: Sharmin Jassal Corporate Communications P: + 61 2 8247 8900 E: sjassal@frost.com List of Keywords in this Press Release: European, commercial vehicles, CV, emerging economies, legislations, original equipment manufacturers, OEMs, road freight, vehicle safety, environment, European Union, EU, road user charging system, intermodal transportation, congestion charging systems, safety systems, hybrid engines, selective catalyst reduction technology, SCR, functional digital vehicle capability, cockpit modules, emission technologies, steer-by-wire systems, lane departure warning systems, light commercial vehicles, LCV