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A regional view of truck-industry profit pools

How will profits for the truck industry develop in China, Europe, North America, and beyond—and what does that mean for the competitive landscape?

The road ahead for the global truck industry will likely be profitable but more competitive. Our analysis through 2030 reveals that mature, high-margin markets will remain major profit pools for the medium- and heavy-duty truck sector (trucks of more than six tons), and that industry trends are expected to further increase the importance of the aftersales business for OEMs (Exhibit 1).

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Those are just some of the findings from our new report, Route 2030—A regional view of truck industry profit pools. This article summarizes additional insights from the report, which draws on market data and annual reports of major truck OEMs covering about 80 percent of the global sales volume in medium- and heavy-duty trucks.

Overall, truck profits are expected to increase by €4.9 billion, reaching €16.1 billion in 2030. Of that pool, aftersales profits will account for €7.1 billion, with 21.1 percent return on sales, thus accounting for almost half the global OEM profit pool by 2030. In fact, our research reveals that advanced markets already exhibit greater profitability in aftersales than in new truck sales.

Regionally, North America and Western Europe remain the most profitable markets, contributing approximately 65 percent to the overall profit pool (Exhibit 2). Emerging markets will likely experience below-average profitability, especially those in the Asia–Pacific region, India, and South America (although Brazil is showing signs of a market recovery). Central and Eastern Europe will probably be the only region to combine relatively strong profitability (6.2 percent return on sales in 2030), with above-average unit volume growth at a compound annual growth rate of 3.8 percent through 2030. The expected strong recovery in Russia will mainly drive this performance.

China’s truck market is expected to expand its profit pool from €1.6 billion in 2017 to between €1.8 billion and €2.4 billion in 2030, driven by the attractive “upper budget” segment, while the share of premium imports in the Chinese truck market will largely stagnate. Global truck makers are expected to localize products in China and compete for the upper-budget market, which includes “localized premium” trucks.

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The strong showing of the global truck industry is attracting new players that are vying to enter this profitable industry with new technologies (for instance, alternative powertrains, autonomous vehicles, and truck connectivity solutions). They could put unprepared incumbents at a disadvantage.

We believe global truck makers should focus on three activities:

  • Capture earnings in mature markets and prepare for new opportunities in selected emerging markets, especially the upper-budget segment in China.
  • Make a concerted effort to meet regulatory and market obligations with a strong focus on cost and operational excellence.
  • Overinvest today to build new opportunities and business models going forward.

Download Route 2030—A regional view of truck industry profit pools, the full report on which this article is based (PDF—6MB).

About the author(s)

Dago Diedrich is a senior partner in McKinsey’s Düsseldorf office; Paul Gao is a senior partner in the Hong Kong office; Bernd Heid is a senior partner in the Cologne office; Matthias Kässer is a partner in the Munich office, where Sebastian Küchler is an associate partner; and Friedrich Kley is a consultant in the Hamburg office.

The authors wish to thank Christian Begon, Hannes Herrmann, Daniel Höflinger, and Maximilian Orgonyi for their contributions to the report.

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