Medium-Duty to Drive Gains Around World, Report Says

This story appears in the March. 11 print edition of Transport Topics.

Global truck sales should expand by 4.3% this year over the 2012 level, boosted by medium-duty models and nations with developing economies, according to a report from consulting firm Frost & Sullivan.

The report projects a global sales increase to 2.75 million heavy- and medium-duty trucks, from 2.64 million from the year before. It predicts “moderate expansion in truck demand in North America” and a “slowdown in Europe.”

While the BRIC nations — Brazil, Russia, India and China — have received a great deal of attention in recent years, Frost & Sullivan said it is time to look at the “Next 11” nations.

Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam are greatly expanding their use of trucks, particularly medium-duty models.

The report sees “robust growth in Next 11 and other rest-of-the-world markets,” with Indonesia, Mexico and Turkey buying trucks very heavily.

The report estimates heavy-duty trucks will account for 65% of sales in 2013, with medium-duty accounting for 35%.

Medium-duty sales are expected to grow more rapidly at 5.6% a year, while the heavy-duty volume should expand by 3.6%, according to the report.

“When you look at much of the ‘rest of the world’ nations, in terms of infrastructure, there are roads where you can’t even turn around a heavy-duty truck,” said Sandeep Kar, Frost’s director of global commercial vehicle research.

He said the report considers medium-duty vehicles as the North American equivalent of Classes 4-6 gross vehicle weight.

Africa, he said, is the opposite of the world’s average distribution of trucks, with 67% medium-duty and 33% heavy-duty. Kar said South Africa leads the continent in truck purchases, but nations including Egypt and Kenya are buying more.

Commenting on the North American and Western European markets, the report said manufacturers are pursuing “soft technologies,” such as telematics, improved cabin design and advanced safety technologies. Telematics involves communication among components within a vehicle and between a vehicle and its home office.

Germany’s Daimler Trucks said as part of its 2012 year-end report that it “anticipates a slight increase in unit sales in the year 2013 and further growth in 2014, although the development in 2013 will at first be rather moderate or even negative in some key markets due to the ongoing difficult economic situation.”

At a recent press event in Mexico, a Daimler Trucks North America executive said he would like to see his arm of Daimler Trucks increase annual exports of trucks to 15,000 units by 2015 from the current level of 10,000. DTNA exports to Australia, South Africa and South America.

Sweden’s Volvo Group is investing about $900 million on Chinese growth. The company set up a joint venture with Dongfeng Motor Group Co. to produce heavy- and medium-duty trucks.

Daimler has been the world’s largest truck maker and the Frost report said the company will sell about 350,000 heavy and medium trucks this year, but the Volvo-Dongfeng joint venture could eventually catapult Volvo’s annual sales to 400,000 units.

In previous reports, Frost has talked about the importance of platform manufacturing.

“Look at Ford Motor Co. and the Focus,” Kar said. “It’s sold all over the world, but it’s manufactured locally and components are adjusted for each market. It’s built locally but sourced from the mother ship.”

In a Feb. 28 investors’ presentation, Volvo executives said that they have three platforms for approaching world truck sales, a premium/high-end line for most of Europe and North America, a basic platform for low-cost trucks and a mid-level value platform.

“Twenty-eight percent of all heavy-duty trucks sold in 2013 will feature a platform-based lineage,” the Frost report said.

Paccar Inc. recently described its efforts to expand beyond its traditional markets of North America — Kenworth Trucks and Peterbilt Motors — and Europe — DAF Trucks NV.

The DAF division is constructing an assembly line in Brazil that is supposed to come online this year. Trucks there will use the Paccar MX engine.

Kenworth exports to the Andean region of South America and to Russia, where DAF also sells. DAF is also the third-largest heavy-duty manufacturer in Taiwan.

Navistar International Corp. executives said their global business is now focused in South America, particularly Brazil, and also China. The company recently backed out of an Indian joint venture.