Light Commercial Vehicle (LCV) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Light Commercial Vehicle (LCV) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The light commercial vehicle market was valued at USD 542.53 billion in 2021, and it is expected to reach USD 820.04 billion by 2027, registering a CAGR of about 7.02% during the forecast period 2022 - 2027.

The outbreak of the novel coronavirus and the associated lockdown and restricted movement of goods may have a bearing on the segment over the near term. The governments shifted their preference toward the healthcare sector spending, and several other infrastructural projected were stopped for some time to maintain the social distancing norms.

Increasing regulations on vehicle emissions, advancement in vehicle safety, the introduction of driver-assist systems in vehicles, and rapidly growing logistics in the retail and e-commerce sectors, have been significantly driving the demand for the new and advanced commercial vehicles.

The demand for LCVs are likely to increase, as the logistics and e-commerce industries are growing rapidly. Additionally, 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.

The transition toward electric mobility, further increases the demand for light commercial vehicle, owing to the faster adoption of electric vehicles by major companies. Large-scale manufacturers are also offering several products, in partnerships with other major companies, to transform the existing majority of engine powered light commercial vehicle to electric over the forecast period.

Due to the tremendous growth among sectors, like logistics and supply chain industries, the adoption of electric vehicles is quite evident in many emerging markets. Adding to that, the stringent emission norms in the countries worldwide pushing many companies to electrify the vehicles also play a crucial role in the market's growth.

Big logistics and e-commerce companies have already announced to turn their entire fleets to electric. The companies have been partnering with key players in the market to source the vehicles. For instance,

• In August 2021, Euler Motors, a manufacturer of electric commercial vehicles, announced that BigBasket, Flipkart, Udaan, along with some other e-commerce, hyperlocal and B2B delivery players, placed an order with it for 2,500 EVs for intra-city deliveries. The companies will deploy Euler Motors’ EV across Delhi-NCR, Bengaluru, Hyderabad and Chennai for their first, mid & last-mile operations.
• In March 2021, FedEx announced its global target for 50% of all newly procured vehicles to be electric by 2025 rising to 100% of all new purchases by 2030. FedEx aims to achieve carbon-neutral operations globally by 2040 with electrification of its pick-up and delivery vehicles being a major area of investment.

It has been identified that adding light electric commercial vehicles (LECV) to the vehicle fleet led to a distribution cost saving of 3% in the separate mail and parcel network. The companies and organizations which have large fleets are preferring to buy electric vehicles instead of leasing them.

The government regulations, financial incentives toward electric vehicles, and the quick establishment of infrastructure supporting EVs can boost the market studied during the forecast period.

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 J.D. are dominating a rapidly growing e-commerce ecosystem in the country. In China, revenue from retail e-commerce was estimated at roughly USD 1368457 million in 2021, with YoY growth of 8.5%. While in 2020, it was around USD 1260402 million. This factor is expected to drive the LCV market's 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 and 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. Rapid urbanization has created new retail and e-commerce platforms that require efficient logistics, leading to the Light Commercial Vehicles (LCV) market’s growth.

The vehicles classified by the United States government under Light Vehicles include Sports Utility Vehicles, Vans, Pick-up Trucks, and Multi-purpose Vehicles. The new vehicles sales of Light commercial vehicles in the US stood at 790910 units in Jan 2022. In Feb 2022, 820811 units registered a MoM growth of around 4% in Feb compared to the previous month.

The major players in the Light Commercial vehicle market are General Motor, Toyota Motor Corporation, Ford Motor Company, Stellantis N.V. and Tata Motors Ltd. etc.

LCV manufacturers are developing advanced technologies and launching new products in order to stay competitive in the market. For instance,

• In March 2022, Daimler AG debuted its 2023 Sprinter Van with a new diesel engine and an AWD system. The new engine produces 208 hp, and it is expected to go on sale in the United States by early 2023.
• In 2021, The company revealed the new Renault Kangoo Van, successfully catering to the large European market of vans, thereby gaining an edge over the competition.
• In March 2021, Renault started accepting orders for the new Traffic van, with sales live from the end of 2021. The completely redesigned interior and the cabin of the van are expected to offer optimum practicality and connected mobile technology. The van is also equipped with new ADAS features for long-haul transit purposes.

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