Asia-Pacific Commercial Vehicles Market - Growth, Trends, COVID-19 impact and Forecasts (2022 - 2027)

Asia-Pacific Commercial Vehicles Market - Growth, Trends, COVID-19 impact and Forecasts (2022 - 2027)

The Asia-Pacific commercial vehicles market was valued at USD 439.82 billion in 2021, and it is expected to reach USD 556.51 billion by 2027, registering a CAGR of around 4% during the forecast period (2022-2027).

The COVID-19 pandemic has hindered the growth of the Asia-pacific commercial vehicle market due to trade and travel restrictions imposed by the government in the region. Commercial vehicle sales have declined due to the outbreak of COVID-19 across the region. However, the commercial vehicle market across the region is experiencing a shift, as consumers are seeking affordable products due to COVID-19. This potential shift in consumer preferences has been diverted toward used vehicles. In 2020, the demand for used vehicles increased in almost every part of the world.

Over the long term, factors like advancement in vehicle safety, the introduction of driver-assist systems in vehicles, and rapidly growing logistics in the retail and e-commerce sectors are expected to drive the demand for new and advanced commercial vehicles in the market. However, various mergers and acquisitions among the key players are also anticipated to drive the market. For instance,

Key Highlights

• In April 2021, Isuzu Motors completed the acquisition of UD Trucks from the Volvo Group as part of the completion of a strategic alliance between the Volvo Group and Isuzu Motors.

Owing to government initiatives, India, China, and Japan are likely to hold a significant share in the market during the forecast period. Moreover, investments in developing electric trucks (e-trucks) and light commercial vehicles are likely to boost the growth of the market.

Key Market TrendsThe Light Commercial Vehicles Segment is Anticipated to Dominate the Market

Under the light commercial vehicles (LCVs) segment, vehicles with a gross vehicle weight rating of less than 16 metric tons have been considered, including pickup trucks, vans, light, and medium trucks, and minibusses.

The shift in industrial production to Asia, especially in China, has expanded trade routes, contributing to the logistics market and indirectly to commercial vehicles. The demand for LCVs is likely to increase as the logistics and e-commerce industries are growing rapidly. For instance,

• In February 2021, e-commerce giant, Amazon, announced a partnership with Mahindra Electric to deploy electric vehicles into its delivery network. Amazon aims to reach 10,000 EVs of fleet size by 2025.
• Flipkart, in the same period, partnered with Hero Electric and Piaggio to achieve a 100% electric delivery fleet by 2030. These partnerships aim to improve the charging infrastructure and include more electric vehicles in the commercial vehicles sector in India.

Additionally, rapid urbanization has created new retail and e-commerce platforms, which require efficient logistics, leading to the growth of the light commercial vehicles (LCV) market. The rapid urbanization in the ASEAN countries, like the Philippines, Thailand, Vietnam, and the rest of Asia-Pacific, is expected to drive the demand for light commercial vehicles in the region.

China is Expected to Dominate the Market

The Asia-Pacific market growing due to several infrastructure investments and construction projects in progress and announced for the future. These projects are expected to significantly increase the demand for heavy-duty transportation trucks for material transport across and inside several countries of the region. The increase in spending on several infrastructure development projects in countries in the Asia-Pacific region drives the market growth.

In China, for a to­tal of 11 provinces, in­clud­ing Yun­nan, Sichuan, and Fu­jian, the to­tal in­fra­struc­ture investment amount for key pro­jects an­nounced in 2020 totaled CNY 27.68 tril­lion. Investments in infrastructure, like the Indonesian National Medium-term Development Plan (USD 460 billion) and Vietnam Socio-Economic Development Plan (USD 61.5 billion are expected to offer opportunities for commercial vehicles. In November 2020, Australia announced an investment of AUD 110 billion over 10 years into transport infrastructure development.

In 2021, over two million light commercial vehicles had been produced in China. This represented a year-on-year increase of one percent and a nine percent growth over two years.

The Chinese e-commerce industry is continuously growing which is driving the LCV industry in the country. For instance, Local technology companies such as Alibaba Group, Tencent, and JD are dominating a rapidly growing e-commerce ecosystem in the country. Revenue from retail e-commerce in China was estimated at roughly 1368457 million U.S. dollars in 2021 with YoY growth of 8.5%. While in 2020 it was around 1260402 million US dollars. This would be an incremental factor in the LCV market growth.

The market is growing strongly and gravitating toward European-style compact vans and commercial vehicles. Increased urbanization and the boom in e-commerce call for optimized logistics together with new transport plans in city centers, both for people and goods. Final-mile deliveries in urban areas are expected to increase by 125% between now and 2030.

Light commercial vehicles are largely used for carrying goods for shorter distances. The demand for LCVs is likely to increase as the logistics and e-commerce industries are growing rapidly. Also, the Rapid urbanization has created new retail and e-commerce platforms which require efficient logistics, leading to the growth of the Light Commercial Vehicles (LCV) market.

Similarly, In March 2021, India announced INR 118,101 crores investment into the country's infrastructure development. Numerous companies such as Ashok Leyland and Tata Motors have been developing and introducing their advanced commercial vehicles to different markets across the globe, which has supplemented the growth of the global market. Moreover, major players in the country are introducing new truck ranges in the domestic market. For instance, in March 2021, Tata Motors unveiled its light commercial trucks (I&LCV) Ultra Sleek T-Series. All trucks are powered by the future-ready BS-VI 4SPCR engine, with a 100hp power and a torque rating of 300nm.

The electric vehicle industry in Asia-Pacific is still in the earluy stages compared to several developed and developing countries across the world. However, the major companies are working toward developing electric commercial vehicles which aids the market growth over coming years.

Competitive Landscape

The Asia-Pacific Commercial Vehicle Market is consolidated and is led by globally and regionally established players such as Toyota Motor Corporation, ISUZU, Mitsubishi Motor Corporation, Ford, and Hino Motors. These companies have strong distribution networks at a global and regional level. Product expansion facilities, growing logistics, and e-commerce are likely to encourage the market players in the region. These companies adopt strategies such as new product developments, collaborations, and contracts and agreements to sustain their market position. . For instance,

• In September 2022, Tata Motors introduced new generations of its commercial vehicles with design updates that will give the lineup new life and attract new customers. The company unveiled the K.14 Ultra, 710 SK, and 610 LPK scope of tippers. The K.14, the most expensive model in this line, has a seat that is mechanically suspended, an electric tipping switch, and a 3.3L engine with 9.0X20 tires. The T.16 CX Ultra truck also featured 360-degree monitoring, telescopic steering, dual fuel efficiency modes, and live fuel monitoring.

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