Megatrend development is enacting a profound change on the commercial vehicle sector, writes Roland Berger’s Wilfried Aulbur, Walter Rentzsch, Frank Pietras and Wenbo Yuan

The transportation industry has seen solid growth over the last 20 years. Markets like the EU and North America have seen a CAGR of 3.8% during this time frame while emerging markets like India are even more dynamic with growth rates close to 10%. A well-oiled logistics industry was taken for granted in the past, but the COVID crisis and related supply chain constraints have reiterated how important it is to be able to move goods and people from A to B.

Considering positive fundamentals and a renewed appreciation, the industry should be feeling pretty positive. Yet, a certain nervousness seems to be pervasive; a feeling of uncertainty that is not only driven by pandemic and geopolitical events, but by a fundamental transformation that is enabled and driven by technology.

As can be seen in the figure below, the industry and related sectors face numerous challenges.

autonomous mobility, autos, cars, mobility, managing volatility: the race to conquer an uncertain future in the cv industry

A continued push for sustainable freight transport drives large investments in electrified and hydrogen powertrains. Autonomous trucks, with their massive cost savings potential, will disrupt established business models and shift the power balance in the truck ecosystem. Asset tracking, predictive maintenance and other digitisation efforts improve efficiency and transparency in the logistics chain and change the way companies do business. Warehousing will also have to adjust to some of these trends, particularly regarding process flows and operating hours to enable autonomous trucks. In addition, technology innovations such as AMRs and AGVs impact and change warehouse operations. Last mile delivery needs to be more efficient, especially due to increasing e-commerce volumes, and will drive adoption of new vehicle concepts, decentralised depots, delivery robots and more. Customers will drive transparency along the supply chain both from a delivery as well as a sustainability perspective enabled by blockchain and other technologies.

As a result, the environment in which companies operate is more interconnected and complex than ever before. New trends emerge quickly and can arise from non-traditional sources. Understanding this environment, separating the noise from the essential, and translating this into clear strategic roadmaps for companies is a tremendous task.

Who will lead?

Who will win this multi-legged rat race? Established truckmakers or up and coming start-ups? The transportation industry is a conservative industry, hence a base assumption could be that established OEMs and suppliers have the upper hand. Yet, they face several challenges.

Take the current semiconductor crisis as an example. Automotive OEMs and suppliers by and large did not understand that semiconductor suppliers could not be treated like traditional component suppliers. Reducing orders during COVID meant that supply capacity was allocated elsewhere. When orders picked up again, capacity was no longer available. The overall semiconductor buy of the automotive industry is about US$50bn, about the same volume that Apple buys yearly. Automotive customers require a large amount of complexity and variation. Apple, hardly any. Investment cycles in the semiconductor industry are also long: it takes about four years from starting a factory project to delivering chips to an automotive plant. Hence quick fixes by adding capacity are not feasible either. The result was a continuing crisis that is likely to accompany impact the industry through 2022.

Culture is another challenge. Many of the new technology companies focus on service-based business models. A service culture is very different from the product-centric culture of today’s truckmakers and suppliers. Several players are deploying significant resources to achieve this transformation either organically or inorganically. Many have found it difficult to make the transition and earn money in the process.

Managing and succeeding in the technology-driven transformation of the industry has become an existential, do or die question. All organisational resources will be mobilised to ensure business continuity.

This transition becomes even more pressing as traditional business models come under threat. For instance, with electrification and autonomy, truckmakers potentially lose two areas of competitive differentiation and value addition—the powertrain and the cabin. Compensating these losses in revenue and profit must come from new business ideas, many of which will be service-based.

Legacy is another area of concern. Investments in internal combustion engines are today investments in businesses that have a residual value of zero some time in the not-too-distant future. Yet, they are necessary to be competitive in the short term and bind significant financial resources. The brand promise of safety and reliability is an argument to buy new technology from existing players but implies longer testing and validation cycles and lower risk tolerance than start-ups leading to longer development times and delayed launches of new technology. Existing relationships with dealers and customers are based on a thorough understanding of the industry and its use cases but limit operational flexibility, such as in the transition to online sales or the exploitation of autonomous driving technology.

Funding is equally a concern for incumbents. Traditional players are listed and have a difficult time attracting venture and other risk capital for the development of new technology. This leads to investment constraints and can impact development times negatively, especially when competing with entities that are backed by powerful investors or cash-rich parent companies as is the case in autonomous technology. Funding constraints also imply that traditional players cannot pursue all the different technology angles that are relevant for their business at once. They need to carefully pick their battles while at the same time competing with 100% focused start-ups in each area.

Potential disruption

Looking at these challenges, truckmakers and traditional suppliers are unlikely to drive the technology transition in the transportation industry in its entirety. But does this mean that they will ultimately succumb to more nimble and aggressive players?

This scenario is equally unlikely. Truckmakers and suppliers have built up industry and use case understanding over decades that is relevant for the development and deployment of new technology and difficult to replicate quickly. Brand reputation, solid networks, customer reach and global scale are other factors that clearly strengthen the hand of existing players. More importantly, many of the players today recognise that they simply do not have a choice. Managing and succeeding in the technology-driven transformation of the industry has become an existential, do or die question. All organisational resources will be mobilised to ensure business continuity.

Many existing OEMs and suppliers in the commercial vehicle industry are here to stay, but a few may not be able to successfully manage the transition. The ones that do, will become very different from what they are today. They may also find themselves amongst new company. Take Tesla, for example. If Tesla’s Semi lives up to its promise of a reliable vehicle with a daily driving range of 500 miles and a price of US$180,000 it will change the composition of the market and further accelerate the speed of change and volatility of the industry.

About the authors: Walter Rentzsch is a Principal and Wilfried Aulbur a Senior Partner in Roland Berger’s Chicago office; Frank Pietras and  Wenbo Yuan are Partners in Roland Berger’s Berlin and Shanghai offices respectively

Keyword: Managing Volatility: The race to conquer an uncertain future in the CV industry

CAR'S NEWS RELATED

No, You Couldn’t Have Driven the Oly Bronco Any Better

Iconic off-road race-Bronco was inherently unstable, even Parnelli Jones rolled it, several times. Chris Collard The iconic Oly Bronco, raced to victory in two Baja 1000s by Parnelli Jones, was rolled twice in the recent NORRA Mexican 1000. Big Oly has always been notoriously difficult to keep upright, even Parnelli ...

View more: No, You Couldn’t Have Driven the Oly Bronco Any Better

Top 5 MPVs in India

India’s automobile market is expanding at a rapid pace. Gone are the days when we only relied on two or three automobile companies for our transportation needs. Now, it gets a little difficult to choose which vehicle suits you best. Here are some of the MPVs today:  Toyota – ...

View more: Top 5 MPVs in India

Woman Faked Death in Cross-Country Luxury Vehicle Fraud Scheme Worth $550,000

No, this isn’t a Dateline episode about vehicle fraud…yet. This luxury vehicle con started in Virginia but moved around as the couple managed to swindle car dealerships out of over 20 cars. How did these two scam so many car dealerships by faking someone’s death? The plot for this luxury ...

View more: Woman Faked Death in Cross-Country Luxury Vehicle Fraud Scheme Worth $550,000

Exclusively Built Custom 1949 Mercury Amazes With Its Beauty

If you’re an enthusiast of Mercury, which is a presently defunct division of the legendary American automobile manufacturer Ford Motor Company, then you also will agree that the vehicle, filmed in today’s video, is far more beautiful than the prettiest woman or the most handsome guy on the planet! ...

View more: Exclusively Built Custom 1949 Mercury Amazes With Its Beauty

Son surprises his father on his 60th birthday with a Pontiac GTO

Despite the fact that the young grandson revealed the truth and ruined the surprise by saying “we bought you a car” at 1:17, this father and son couldn’t be happier about the present for his 60th birthday. They told him to close his eyes, and led him outside, but ...

View more: Son surprises his father on his 60th birthday with a Pontiac GTO

The Sound Of This ’65 Mustang Hitting A Trailer Will Hurt Your Soul!

Loading a car on a trailer should not be this difficult, but if you do not do it with care, sometimes things backfire like this. This gentleman has just bought an amazing show-quality vehicle in California and it looks like an amazing built. Normally he does not decide to ...

View more: The Sound Of This ’65 Mustang Hitting A Trailer Will Hurt Your Soul!

2023 Kia Sportage, Toyota BZ4X headlines this week's new car reviews

The 2023 model year ramps up with Toyota’s first dedicated electric vehicle and Kia’s first hybrid iteration of its bestselling Kia Sportage. Here’s what else moved us this week.  The Sportage sizes up for 2023, with sharper, more futuristic styling, a hybrid model, and new rugged X-Pro trims. It ...

View more: 2023 Kia Sportage, Toyota BZ4X headlines this week's new car reviews

This 2022 Kia SUV Comes In Dead Last in Rankings

The 2022 Kia Sorento is one of Kia’s popular SUVs. It’s a three-row midsize SUV with plenty of room and a stylish exterior. Yet things with the Kia Sorento are not all great. Consumer Reports reviews of the 2022 Kia Sorento have it in last place of all midsize three-row ...

View more: This 2022 Kia SUV Comes In Dead Last in Rankings

Spain: Plug-In Car Sales Maintain 10% Share

Florida Man WaterskiIs Barefoot Behind a Formula One Car on Its Way to the Miami Grand Prix

Hot Tires Alert: The Jeep Wrangler 392 Is Getting a Burnout Mode

Happy Mother's Day: One Thing Is For Sure, Elon Musk Loves His Mom

Tata Nexon EV Ready To Launch On May 11

Peugeot Sport’s 9X8 hypercar won’t be in Le Mans race, to debut later in 2022 WEC season

Only 1 Dodge Model Is Recommended by Consumer Reports

Do You Need an OBD2 Scanner?

Tesla Model 3 Performance Puts Up A Great Fight Against Lamborghini Urus

Why ‘really tough’ Miami strategy will have F1 teams thinking

Howell Is Elite At Rocket Raceway Park

2022 Maruti Suzuki XL6 with a wide-body kit: What it’ll look like

OTHER CAR NEWS

; Top List in the World https://www.pinterest.com/newstopcar/pins/
Top Best Sushi Restaurants in SeoulTop Best Caribbean HoneymoonsTop Most Beautiful Islands in PeruTop Best Outdoor Grill BrandsTop Best Global Seafood RestaurantsTop Foods to Boost Your Immune SystemTop Best Foods to Fight HemorrhoidsTop Foods That Pack More Potassium Than a BananaTop Best Healthy Foods to Gain Weight FastTop Best Cosmetic Brands in the U.STop Best Destinations for Food Lovers in EuropeTop Best Foods High in Vitamin ATop Best Foods to Lower Your Blood SugarTop Best Things to Do in LouisianaTop Best Cities to Visit in New YorkTop Best Makeup Addresses In PennsylvaniaTop Reasons to Visit NorwayTop Most Beautiful Islands In The WorldTop Best Law Universities in the WorldTop Richest Sportsmen In The WorldTop Biggest Aquariums In The WorldTop Best Peruvian Restaurants In MiamiTop Best Road Trips From MiamiTop Best Places to Visit in MarylandTop Best Places to Visit in North CarolinaTop Best Electric Cars For KidsTop Best Swedish Brands in The USTop Best Skincare Brands in AmericaTop Best American Lipstick BrandsTop Michelin-starred Restaurants in MiamiTop Best Secluded Getaways From MiamiTop Best Things To Do On A Rainy Day In MiamiTop Most Instagrammable Places In MiamiTop Interesting Facts about FlorenceTop Facts About The First Roman Emperor - AugustusTop Best Japanese FoodsTop Most Beautiful Historical Sites in IsraelTop Best Places To Visit In Holy SeeTop Best Hawaiian IslandsTop Reasons to Visit PortugalTop Best Hotels In L.A. With Free Wi-FiTop Best Scenic Drives in MiamiTop Best Vegan Restaurants in BerlinTop Most Interesting Attractions In WalesTop Health Benefits of a Vegan DietTop Best Thai Restaurant in Las VegasTop Most Beautiful Forests in SwitzerlandTop Best Global Universities in GermanyTop Most Beautiful Lakes in GuyanaTop Best Things To Do in IdahoTop Things to Know Before Traveling to North MacedoniaTop Best German Sunglasses BrandsTop Highest Mountains In FranceTop Biggest Hydroelectric Plants in AmericaTop Best Spa Hotels in NYCTop The World's Scariest BridgeTop Largest Hotels In AmericaTop Most Famous Festivals in JordanTop Best European Restaurants in MunichTop Best Japanese Hiking Boot BrandsTop Best Universities in PolandTop Best Tips for Surfing the Web Safely and AnonymouslyTop Most Valuable Football Clubs in EuropeTop Highest Mountains In ColombiaTop Real-Life Characters of Texas RisingTop Best Beaches in GuatelamaTop Things About DR Congo You Should KnowTop Best Korean Reality & Variety ShowsTop Best RockstarsTop Most Beautiful Waterfalls in GermanyTop Best Fountain Pen Ink BrandsTop Best European Restaurants in ChicagoTop Best Fighter Jets in the WorldTop Best Three-Wheel MotorcyclesTop Most Beautiful Lakes in ManitobaTop Best Dive Sites in VenezuelaTop Best Websites For Art StudentsTop Best Japanese Instant Noodle BrandsTop Best Comedy Manhwa (Webtoons)Top Best Japanese Sunglasses BrandsTop Most Expensive Air Jordan SneakersTop Health Benefits of CucumberTop Famous Universities in SwedenTop Most Popular Films Starring Jo Jung-sukTop Interesting Facts about CougarsTop Best Hospitals for Hip Replacement in the USATop Most Expensive DefendersTop Health Benefits of GooseberriesTop Health Benefits of ParsnipsTop Best Foods and Drinks in LondonTop Health Benefits of Rosehip TeaTop Best Air Fryers for Low-fat CookingTop Most Asked Teacher Interview Questions with AnswersTop Best Shopping Malls in ZurichTop The Most Beautiful Botanical Gardens In L.A.Top Best Mexican Restaurants in Miami for Carb-loading rightTop Best Energy Companies in GermanyTop Best Garage HeatersTop Largest Banks in IrelandTop Leading Provider - Audit and Assurance In The USTop Best Jewelry Brands in IndiaTop Prettiest Streets in the UKTop Best Lakes to Visit in TunisiaTop Highest Mountains in Israel