Truck industry 2020: The future is global - Roland Berger

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Automotive Competence Center
Market drivers
India's general economic development, combined with large-scale infrastructure
projects such as the Golden Quadrilateral, hydropower projects,
port development and mining projects, have driven strong growth in the
truck industry in the past. Even before the financial crisis struck, however,
a slowdown in demand for medium- and heavy-duty commercial vehicles
was foreseeable. Rising diesel prices and high interest rates pushed up
freight prices and thus eroded profit margins on transporters. As a result,
fleet customers postponed the purchase of new vehicles. Concurrently,
changes in the regulatory environment (including bans on HCVs within
some city boundaries at certain times) and innovative products (such as
the Tata Ace) have encouraged a discernible shift toward LCVs. The market
for medium- and heavy-duty trucks thus shrank by 6% even in 2007, when
India's economy was still expanding at 9% per annum. Now that the global
economic downturn too is making itself felt, stagnation or at best slow
growth can be expected in these segments.
On the other hand, the LCV market is benefiting handsomely. Changes in
legislation, the affordable initial investment and low operational costs for
these smaller vehicles is driving brisk demand, especially for trucks under
3.5 tons. This segment will also profit from the spread of urbanization and
increased cargo shipment possibilities.
Summary
It is hardly fair to call a market of 1.1 billion people a microcosm. For the
purposes of this study, however, this is precisely what India is: a microcosm
that reflects all the key developments currently taking place in the macrocosm
of the world's rapidly globalizing truck industry. While international
players are targeting India with slimmed-down versions of their models for
specific usages, local manufacturers are building up their knowledge and
low-cost production capabilities to expand into other emerging countries
and even triad markets.