MarketLine Blog

Developing Countries Propping up the Truck Manufacturing Industry

 

Because of on-going financial difficulties being experienced in many nations around the world, truck manufacturers in a myriad of countries have suffered. However, developing countries such as India and China have propped up the industry, allowing the global value to increase despite weak economic conditions in Western countries.

The global truck manufacturers industry grew by 8.3% in 2011, to reach a value of $558.6 billion, representing a compound annual growth rate of 4.5% for the period spanning 2007-2011.

Growth was primarily driven by demand in South America and Asia-Pacific, as a majority of Western economies stagnated and demand for trucks suffered as a result, thus impacting production output. Asia-Pacific’s growth was led by China and India’s continued dynamic economic development, which led to strong growth in demand. China in particular saw a majority of its truck manufacturing industry focusing on heavy trucks, which accounted for nearly a half of all trucks produced. This is in part a result of China’s huge infrastructure projects, and its housing boom, increasing demand for heavy haulage of building materials in addition to an increase in consumer goods demand which also requires haulage by heavy goods vehicles.

Truck manufacturers increasingly have to contend with ever increasing oil prices, thus requiring investment in research and development to develop more fuel efficient engines in order to reduce fuel costs for customers. Furthermore, ever more stringent emissions legislation has also led to truck manufacturers being forced to develop new technologies to abide by these new standards to ensure their vehicles can be sold in the relevant countries.

Another issue that threatens truck manufacturers is alternative modes of transport, such as railway or water-borne transport. In some developing countries this is a very real threat, for example China is investing $62 billion in railway infrastructure during 2012 (after spending $108.5 billion in 2010 and $72.7 billion in 2011). This level of investment and construction is expected to pose a long term threat to road haulage, and as a result it could impact on truck manufacturers. However, there are aspects of road haulage working in truck manufacturer’s favor, one of these being the ability to make door to door deliveries.

 

Posted in Automotive.

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