Truck industry 2020: The future is global - Roland Berger
Truck industry 2020: The future is global - Roland Berger
Truck industry 2020: The future is global - Roland Berger
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18 |<br />
Automotive Competence Center<br />
Market drivers<br />
India's general economic development, combined with large-scale infrastructure<br />
projects such as the Golden Quadrilateral, hydropower projects,<br />
port development and mining projects, have driven strong growth in the<br />
truck <strong>industry</strong> in the past. Even before the financial cr<strong>is</strong><strong>is</strong> struck, however,<br />
a slowdown in demand for medium- and heavy-duty commercial vehicles<br />
was foreseeable. R<strong>is</strong>ing diesel prices and high interest rates pushed up<br />
freight prices and thus eroded profit margins on transporters. As a result,<br />
fleet customers postponed the purchase of new vehicles. Concurrently,<br />
changes in the regulatory environment (including bans on HCVs within<br />
some city boundaries at certain times) and innovative products (such as<br />
the Tata Ace) have encouraged a d<strong>is</strong>cernible shift toward LCVs. <strong>The</strong> market<br />
for medium- and heavy-duty trucks thus shrank by 6% even in 2007, when<br />
India's economy was still expanding at 9% per annum. Now that the <strong>global</strong><br />
economic downturn too <strong>is</strong> making itself felt, stagnation or at best slow<br />
growth can be expected in these segments.<br />
On the other hand, the LCV market <strong>is</strong> benefiting handsomely. Changes in<br />
leg<strong>is</strong>lation, the affordable initial investment and low operational costs for<br />
these smaller vehicles <strong>is</strong> driving br<strong>is</strong>k demand, especially for trucks under<br />
3.5 tons. Th<strong>is</strong> segment will also profit from the spread of urbanization and<br />
increased cargo shipment possibilities.<br />
Summary<br />
It <strong>is</strong> hardly fair to call a market of 1.1 billion people a microcosm. For the<br />
purposes of th<strong>is</strong> study, however, th<strong>is</strong> <strong>is</strong> prec<strong>is</strong>ely what India <strong>is</strong>: a microcosm<br />
that reflects all the key developments currently taking place in the macrocosm<br />
of the world's rapidly <strong>global</strong>izing truck <strong>industry</strong>. While international<br />
players are targeting India with slimmed-down versions of their models for<br />
specific usages, local manufacturers are building up their knowledge and<br />
low-cost production capabilities to expand into other emerging countries<br />
and even triad markets.