The BRIC markets – Brazil, Russia, India and China – will drive demand for mid-priced commercial vehicles, a fast-emerging sector that ultimately will account for the bulk of worldwide sales, a new study by The Boston Consulting Group concludes.
Still considered emerging markets when it comes to light-vehicle consumption, the scale already has tipped in favor of the BRICs in the CV sector (vehicles with gross weights of at least 3.5 tons), BCG notes, predicting their grip will continue to tighten between now and 2020.
Market growth in the BRICs will be five times the 2000 level by 2020, BCG says, while the pace of CV-sales expansion in the Triad markets of North America, Western Europe and Japan will slow.
The BRICs will account for 64% of global volumes in 2020, according to the BCG forecast. Although that’s down from the 74% share in 2010, when the Triad markets still were working their way out of a recession, it is up from the 44% share they held in 2000.
The forecast calls for the Triads to recover from their 2008 economic collapse short term. But with Western Europe and Japan stagnating after 2013, total CV sales volume will fall below 2000 levels at the end of this decade.
Currently, sales in the four growing BRIC markets are split primarily between low-cost models and high-end vehicles. But BCG says the mid-priced sector is expanding quickly, and global truck makers will need to be ready with new vehicle platforms if they wish to compete.
The mid-priced models will account for 70% of BRIC sales in 2020, compared with about 31% today. They’ll represent 44% of global demand by the end of the decade, the report says.
Driving growth will be tougher emissions and safety regulations. Investments in roads will spark more interest in faster, more sophisticated vehicles, as well, BCG says.
“Triad manufacturers need to get into these countries and develop their midmarket products soon or they will be shut out,” warns Nikolaus S. Lang, a partner in BCG’s Munich office and coauthor of the report. “Some Triad manufacturers have started to localize, but BRIC companies seem well ahead in developing midmarket concepts. Wait, and it will be too late.”
Although CV volume is highest by far in China, BCG recommends truck manufacturers direct considerable focus on the other three BRIC markets, where growth will be fastest.
India will set the pace, with volumes rising 6% annually to 2020, when sales should reach 613,000 units. Midmarket models will account for 75% of that total, BCG says. Today, low-cost models make up 95% of India’s CV sales.
Russia should return to pre-crisis levels in 2013, then expand 4% annually through rest of decade, reaching a volume of 230,000 vehicles, the study says.
A mature Brazil and cooling-off China will grow at a more modest 2% annually. But China will account for 48% of global sales in 2002, with volume estimated at 3.2 million units.
Midmarket trucks will account for 70% of China’s total sales by then, BCG says. Today, low-cost models make up 63% of purchases.