The inevitable shift by OEMs to singularized global platforms for commercial vehicles, their engines and other related components to cut costs will also reshape truck specification strategies in the U.S. and in other markets – and not just because specifications will be more limited due to more “vertical integration” of components among manufacturers, according to experts.
“The move to global platforms is obviously to contain production costs, research and development investments, plus enhance margins,” Sandeep Kar, global director of commercial vehicle research for Frost & Sullivan, told Fleet Owner. “That will limit spec’ing ability as more OEMs move to a ‘European’ style of vertically integrated truck in order to create more ‘commonality’ in the parts and systems that go into these vehicles.”
Kar emphasized that this is because the pace of change affecting the very face and structure of the global heavy-duty truck market, as markets considered as an afterthought a few decades ago – such as Brazil, Russia, India and China, the so-called “BRIC” countries – are now dictating the course of global commercial vehicle demand and industry’s growth.
“As OEMs begin developing growth strategies in this ‘flat-world’ [truck] eco-system, global – not local or regional – truck platforms have emerged as a major requirement for any manufacturer with strategic intent and hunger for global growth,” he explained in a recent research report.
Gary Meteer, account director for commercial vehicle solutions at Polk, added that the smaller overall size of the global commercial vehicle market relative to the automobiles is another factor driving this shift.
“Last year, commercial vehicle sales topped roughly 4 million units; compared that to global light vehicle sales, which range between 14 million and 16 million units,” he told Fleet Owner. “Thus commercial vehicles represent a much smaller total market, and thus OEMs can no longer depend on sales to just one region of the world to stay competitive.”
The need to reduce costs both in terms of component pricing and production expenses is also why truck OEMs are pursuing more “vertical integration” efforts – offering their own lines of proprietary engines, transmission, axles, and other components for their vehicles and often tying the best pricing and support packages to such “all-in-one” combinations.
“OEMs have to maximize manufacturing to get the best bang for the buck for the volumes they are working with,” Meteer noted.
Frost & Sullivan’s Kar stressed that one major result from the move to more “harmonized” global truck platforms will be a reduction in engine size for the North American region. Right now, the average size of a North American heavy truck engine block is around 14.1 liters, according to the firm’s research; by 2018, however, that average should fall to between 12.8 and 13.2 liters – just ahead of the 12-liter average of Europe.
“The size of the [truck] powertrain is shrinking,” Kar said. “But that’s also because more power can be produced from smaller engines. For example, you can get up to 400 hp with some 11-liter engines. In the future, we expect the largest slice of horsepower demand to range between 350 to 400 hp.”
Yet the changeover to more global platforms should also eventually help lower sticker prices for fleets, too, he pointed out, as well as shift spec’ing power to areas of the truck where it matters more for fleets in terms of broader strategic goals – such as where driver recruitment and retention is concerned.
“What will be the future differentiator among fleets and truck brands in the future? It will be the ‘health, wellness, and well-being’ attributes of the truck interior as it relates to the driver,” he said, encompassing everything from dashboard layouts to seating systems and beyond.
“The truck cab is both the work space and living space for drivers, so it has to offer a better ‘mind-body’ solution for both an aging workforce in need of improved ergonomics as well as offer amenities that appeal to a new, younger generation of potential drivers,” Kar noted.
He added that, from the OEM perspective, the cab interior is also one of the last areas that can truly create “differentiation” between makes and models of trucks, helping fleets attract and keep a wide range of drivers in the seats of their vehicles.
Polk’s Meteer also stresses that “globalization” of truck platforms also doesn’t mean that regional design advantages will disappear.
“For example, the conventional tractor will remain the dominant design in the U.S. – it works for this market, so you won’t see cabovers replacing them,” he said. “What you will see is a more harmonized powertrain; engine, transmission, and axle packages built to serve multiple markets instead one specific region such as North America. That’s being done simply to cope with all the emission regulations being put in place around the world.”
While Frost & Sullivan’s research projects that trucks based on such “global platforms” should total some 612,000 units by 2018 – nearly double of global platform-based truck production levels posted last year – Kar cautioned that OEMs won’t all be using the same "sheet of music," so to speak.
“Global platforms strategies vary greatly from OEM to OEM and there is still no common definition for what a ‘global platform’ really means in the commercial vehicle industry,” he said. “The concept is still so new.”
Indeed, Polk’s Meteer points out that the world’s economic troubles are leading to what he calls a “surge” in protectionism strategies, meaning that global OEMs seeking to build trucks in particular markets must form partnerships with local and regional manufacturers to do so.
“These are efforts being put in place to restrict imports in order to preserve local manufacturing,” he explained. “The basic upshot is: if you want to sell here, you have to build here.”