The truck industry is entering a new era: while revenue and profits are still mainly generated in the diesel world, new technologies are increasingly impacting OEMs’ product and investment strategies. Truck OEMs seeking a leading position in new technologies face the challenging balance of keeping the incumbent business profitable and laying the foundation for the fundamental impacts that new opportunities such as alternative powertrains or autonomous driving will bring to the industry.
The report at hand sets out to quantify the risks and opportunities for truck OEMs to inform a discussion on the strategic actions OEMs need to take. We have arrived at this assessment of industry revenue and profit pool by quantifying the industry’s development along 11 key trends. From this, three key messages can be derived:
We are positive on the industry’s outlook – profit pools expected to grow by more than 40 percent (EUR 4.9 billion) to EUR 16.1 billion by 2030
Overall, the future of the global truck industry looks positive. Although we expect more moderate volume growth (CAGR of less than 1 percent until 2030), revenues and profits are expected to grow at CAGRs of more than 2 percent.
We expect total OEM profits to increase by EUR 4.9 billion to about EUR 16.1 billion by 2030 resulting in a slight industry profitability increase from 6.6 percent in 2017 to 6.7 percent in 2030.
Additional profits from macroeconomic growth are eaten up by other market effects
On the one hand, OEMs will continue to profit from the fundamental positive impact of economic growth across the globe resulting in increasing volume demand for trucks until 2030. However, other market-related revenue/profit drivers (mainly price pressure and regulatory measures) are causing significant negative impact on industry profits. The overall effect of these trends is slightly negative.
OEMs have two sources of value creation: increase operational efficiency and succeed in new opportunities
To cushion the negative profit effects from market developments, OEMs need to increasingly focus on operational efficiency and invest in new services and business models. Although OEMs have traditionally put great focus on operational efficiency, new technologies (e.g., advanced analytics, internal digitization) can enable efficiency improvements that lead to a profit pool increase of EUR 2.9 billion. New opportunities, like alternative powertrains, autonomous driving, and Connectivity and Solutions add another EUR 2.7 billion to the profit pool.