Powertrain at the Crossroads Mapping the Future for the Global Bus and Truck Industry Contents Foreword
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Powertrain at the Crossroads Mapping the Future for the Global Bus and Truck Industry Contents Foreword Executive Summary ........................................................ 1 The late impact of the global financial crisis on the truck and bus industry has been profound. However, other forces – equally Introduction ...................................................................... 2 powerful but currently attracting less attention – are also driving significant changes in the powertrain industry. These forces will Macro Constraints Reshaping the Market .................... 4 fundamentally change the rules of the game for players in the truck and bus industry, affecting OEMs, dealers and suppliers Solving the Technology Puzzle ........................................8 alike. As the transformation taking place in the passenger car industry shows, the changes now happening are so great that A Future of Unprecedented Uncertainty .......................9 they may reshape the industrial structure of countries that are Conclusion ...................................................................... 12 heavily dependent on the commercial vehicle industry. Contacts .......................................................................... 13 Authors: Per M. Nilsson Global Head Automotive & Manufacturing [email protected] Didier Schreiber Principal [email protected] Cover image: Photo by © F1online digitale Bildagentur GmbH / Alamy Powertrain at the Crossroads Executive Summary Based on our experience with clients and a recent study of most of the world’s commercial vehicle manufacturers and global suppliers, Arthur D. Little has undertaken a thorough analysis of how new powertrain technologies will impact the bus and truck value chain in 2020. Several key findings can be drawn from the study: ■ Macro constraints, such as oil scarcity, emissions regulation, green profiling and local regulation, will increase the fragmentation of market requirements. ■ The impact of these macro constraints will vary depending on how and where the vehicles are used. ■ In parallel, the range of potential powertrain technologies available to meet the challenges of the future is richer than ever. ■ Although Diesel technology will remain dominant, new technologies will gain market share, mainly for urban applications. As a result of the increasing fragmentation of market requirements and the wide range of technology opportunities available, uncertainty about the future has never been so high. The questions that the industry faces are complex and occur at all stages of the value chain: how to understand the shifting demand? how to identify the future preferred technologies? which segments to serve? which technologies to invest in? what alliances to initiate in order to safeguard economies of scale? Arthur D. Little’s analysis shows that the most successful companies will address this period of changes with a comprehensive approach, combining advanced market analysis with review of the product portfolio and technology strategies. It also shows that the need to share strategic and technology risk requires new forms of collaboration between OEMs and suppliers. 1 Powertrain at the Crossroads Introduction Figure 1. Joint ventures & consolidation in the powertrain industry White motor -81 GM -86 Drögmöller -94 Xian Silver -94 Deutz 10% -98 Prévost -94 Dongfeng -02/04 Nissan diesel -07 Non-exhaustive AB Volvo AB Volvo ACMAT -06 Eicher Motor -07 Säffle karr -81 Leyland bus -88 Steyr bus -92 Carus Nova bus -98 Sunwin bus -00 2001 RVI Berliet -78 Mack trucks -90 Karosa -94 Magirus -75 Irisbus -99 SAIC, Chongqing -06 Samotlor NN -07 Cummins, New Holland -96/06 Changjiang Bus -01 Fiat, Lancia, IVECO IVECO OM, UNIC Orion -00 Freightliner -81 Aero max (Ford) -97 Western star -00 Foton -08 Kamaz 10% -08 Daimler Daimler Kässbohrer Setra -95 Thoms Built Bus -98 Detroit diesel -00 Mitsubishi Fuso -03/-04 Hero Group -08 Kenworth -45 Peterbuilt, Dat -58 Folden -80 DAF trucks -96 Leyland trucks -98 Cummins Westport -08 Paccar Paccar Büssing -71 Gräf & Stilt ÖAF -71 Steyr -90 Neoplan ERF -01 Navistar -05 MAN Foroetrucks -06 Scania 17% -06/07 VW brazil 08 MAN MAN Chrysler Brazil -80 Scania 34% -00 MAN 29% -06/07 Scania 69% -08 VW VW Hino -02 Cummins -92/-05 Scania Scania MAN -05 Mahindra & Mahindra -05/07 Caterpillar -08 Neobus -08 American LaFrance -08 Navistar Navistar Dongfeng -96 Shaanxi -05 Foton -06 Vinamotor -07 Cummins Cummins Tata Motors -92 Westport Innovations -01 Scania -92/-05 Kamaz -06 Navistar -08 Caterpillar Caterpillar AB Volvo -98 FAW -07 Deutz Deutz Westport Innovation -08 Weichai Power Weichai Power Cummins -92 Daewoo Comm. Vehicle -04 Hispano Carrocera 21% -05 Marcopolo S.A. -06 Tata Motors Tata Motors Hino -03 Avia -06 Ashok Leyland Ashok Leyland Isuzu 6% Hino 50% -01 Toyota Toyota Scania -02 Hino Hino Guangzhou -00 J-Bus -04 Isuzu Isuzu JV Volvo -02/-04 Dongfeng Dongfeng Ownership The transportation of goods and people remains central As a consequence, Diesel technology has been developed to the economy. Beyond the current financial crisis, road to meet stricter standards and deliver greater efficiency. transport will continue to grow as wealth continues to increase and spread around the world. The level of investment required to fund this development in powertrain technology has been a key contributor to the During the last 20 years, the truck and bus industry has increasing number of partnerships and consolidation in the been under constant pressure from customers to improve industry. Today, the industry consists of multinational companies transportation efficiency and from legislators to meet and large – and expanding – regional players (see figure 1). increasingly severe regulatory requirements. 2 Powertrain at the Crossroads Figure 2. Distribution of participants in the Arthur D. Little study in (%) Geographical representation Value chain representation Industry expert North America 10 25 45 Europe Supplier 30 60 OEM 30 Asia Looking ahead, the market for commercial vehicles is expected This Arthur D. Little study identifies the issues at the top of to continue to evolve dramatically and powertrain technology will the executive agenda and that, as a result, every company is continue to play a key role. To gain a better understanding of the developing short- and long-term strategies to address them. industry and its future, Arthur D. Little conducted a study of more than 30 bus and truck industry executives around the world. “ Looking ahead, the market for commercial vehicles The study focused on commercial vehicles over eight tons is expected to continue to evolve dramatically and considered the outlook for this sector from 2020 onwards. and powertrain technology will continue to Figure 2 shows the geographic distribution of the participants play a key role”. and what part of the value chain they cover. 3 Powertrain at the Crossroads Macro Constraints Reshaping the Market Three macro constraints will make the coming period one of the most uncertain ever for the industry. The expected Figure 3. Drivers for new powertrain technology oil scarcity and consequent high fuel prices and need for alternative sources of energy will have the greatest impact. Further developments in emissions regulation, including Oil scarcity 4.4 regulations covering CO2 emissions, will continue to stress technology development. Finally environemental pressure, Global emissions 4.1 combination of green profiling and local regulation, will regulations accelerate the development and introduction of new Environmental technologies. pressure 3.6 “ Further developments in emissions regulation, Noise vibration 2.3 harness including regulations covering CO2 emissions, will continue to stress technology development.” 012345 Low Strength High The effect of these macro constraints will differ between regions (OECD, BRIC) and applications (e.g. city bus, long haul). Demands on the powertrain will not only become tougher, they will diverge more and more between market segments. Figure 4a. Oil discovery & consumption Respondents rate oil scarcity as the most important driver of new powertrain technologies in the coming decade, while global 2,500 emissions regulation and environmental pressure are the next Discovery most important (see figure 3). It is interesting to note that 2,000 respondents from Asia rate environmental pressure significantly lower. 1,500 Consumption 1,000 500 Giga barrels (accumulated) (accumulated) barrels Giga 0 1900 1920 1940 1960 1980 2000 2020 Source: IEA WEO 2006, IEA WEO 2008, The highway to oil (Robelius 2007), Arthur D. Little analysis 4 Powertrain at the Crossroads Emissions legislation Figure 4b. Global oil production capacity & consumption Emissions regulations in the OECD countries have forced 90 powertrain manufacturers to reduce particles and NOx (nitrogen oxides) levels to a fraction of the levels emitted 20 years ago. 80 Future standards such as Euro VI will continue to force these levels down. 70 Oil capacity In the mid and long term, two important forces within emissions 60 legislation will have a substantial impact on the development Consumption of future powertrain technologies: Mega barrels per day barrels Mega 50 ■ With particles and NOx levels having been reduced to almost zero, the benefit of a further reduction in this type 40 ‘72 ‘76 ‘80 ‘84 ‘88 ‘92 ‘96‘00 ‘04 ‘08 of emissions is marginal. The truck and bus industry must prepare for regulations on greenhouse gases, especially Source: IEA WEO 2006, IEA WEO 2008,