Light commercial vehicle market is estimated to be valued at US$ 612.53 Bn in 2024, exhibiting a CAGR of 6.8% over the forecast period 2024-2031. Furthermore, growing last-mile delivery across industries is expected to augment the market growth.
Market Dynamics:
Global light commercial vehicle market growth is driven by increasing infrastructure development projects and rising e-commerce penetration. Governments across the globe are investing heavily in commercial, residential, and industrial infrastructure that requires transportation of construction materials and equipment. This positively impact the demand for light trucks and vans. Moreover, the expansion of the e-commerce industry has led to growth of the last-mile delivery market. E-commerce companies are opting for light commercial vehicles to deliver products efficiently to customers. This has boosted sales of light trucks which can customize their interiors as delivery vans. Another major factor is increasing demand for rental passenger transport services such as airport taxis and school buses that use light commercial vehicles. Affordable financing options and tax incentives on commercial vehicles are also contributing to the market growth.
Market Drivers:
Improving economic conditions and rise in disposable income are driving the light commercial vehicle market growth
As the economy recovers from the impact of the COVID-19 pandemic, economic conditions are improving in many countries. Rising consumer confidence and growing disposable income are leading more businesses and individuals to invest in light commercial vehicles. Vans, pickup trucks and other light trucks are witnessing increased demand for delivering goods, transporting equipment and tools for trade industries, and other commercial applications. Improving job market and rising wages mean more people have extra money to spend, boosting the need for light goods transportation. Countries that have been able to bring the pandemic under control and restart their economies are witnessing especially strong demand in the light commercial segment.
Increased focus on e-commerce and last-mile delivery
The pandemic hugely accelerated the shift to online shopping and e-commerce. Consumers have gotten used to ordering goods, groceries, food and other items for home delivery. This has created exploding demand for last-mile delivery services to end customers' doorsteps. Fleet operators are investing heavily in light commercial electric vehicles optimized for parcel and food delivery applications. Manufacturers are innovating new small van and truck models with large cargo areas, easy rear loading, and advanced connectivity features. Alternative fuel and electric light commercial vehicles are finding many new applications in urban delivery services. This major shift to e-commerce and focus on fast, same-day delivery represents a long-term driver of growth for the light commercial vehicle market.
Market Restraints:
Rising cost of ownership is restraining the light commercial vehicle market growth
While demand is growing, rising costs are putting pressure on fleet operators and small businesses. Factors like increased fuel and energy prices, higher insurance premiums, growing maintenance and repair expenses, and rising interest rates on vehicle loans are driving up the total cost of ownership. Commercial users with tight budgets are feeling the pinch. High inflation across most economies means input costs are increasing for vehicle manufacturers as well. This is forcing some to pass higher prices on to customers. The worsening cost landscape could help restrain the pace of growth of light commercial vehicle market, if costs become unmanageable for operators. Efforts to reduce vehicle prices and boost fuel efficiency will be important to overcome this barrier.
Shortages are limiting market growth potential
Shortage of qualified commercial drivers has become a chronic issue in many industries and geographies that rely on light trucks for deliveries, transportation and other applications. An aging workforce and fewer young people entering the field have caused the pool of drivers to shrink. Long hours, stress, increasing regulation and new training requirements have also discouraged people to remain drivers. Commercial operators report difficulty finding and retaining drivers as the job market tightens. Innovations in driver recruitment and autonomous technologies may help alleviate this pressure point over time.
Market Opportunities-
Growing transition to electric vans and trucks is creating new market opportunities
Rising environmental awareness and government support are accelerating fleet electrification in the light commercial vehicle space. Manufacturers are seizing the opportunity by introducing attractive new electric van and truck models, purpose-built for commercial applications. These are optimizing features for cargo capacity, rapid charging, extended range and low operating costs per mile. Helped by subsidies and incentives, purchasers are becoming more willing to make the switch from diesel or gasoline power trains. The transition to EVs helps open up new revenue streams from EV components, charging hardware, energy supply, connectivity services and more. It also creates opportunities for fleet operators by lowering fuel costs and reducing emissions compliance burdens. The expanding light commercial EV market represents a major long-term growth driver of the market.
Advancing connectivity and autonomous technologies create new use cases
Connected vehicles, autonomous driving systems, telematics and fleet management platforms are rapidly evolving capabilities. Manufacturers see opportunities to develop advanced “computer on wheels” offerings optimized for commercial vehicle applications. These innovative technologies generate data streams unlocking new services and business models. Possibilities include self-driving delivery pods and shuttles, remote vehicle monitoring and predictive maintenance, over-the-air upgrade services, safety and compliance features, and integrated mapping/routing software. Commercial users stand to gain significant productivity and efficiency improvements. Manufacturers are partnering to develop these new connected/autonomous technologies that can gain an edge capturing emerging market demand. The application of advanced digital systems within commercial fleets represents a high-growth opportunity sector for automakers.
*Link: https://www.coherentmarketinsights.com/market-insight/light-commercial-vehicle-market-5221
Key Developments:
- In July 2022, Toyota Motor Corporation collaborated with Suzuki Motor Corporation, Daihatsu Motor Co., and Commercial Japan Partnership Technologies (CJPT) to develop mini commercial electric vans
- In June 2022, General Motors announced the supply of 150 Zevo 600 electric vans to FedEx as part of a larger order totaling 2,500 units for delivery purposes
- In March 2022, BYD and Shell announced partnership to enhance charging infrastructure for BEV and PHEV owners in China and Europe, granting access to 275,000 charging points through the Shell network
- In November 2022, First Hydrogen, headquartered in London and Canada, announced the readiness of hydrogen-powered light commercial vehicles (LCVs) for test drives
Key Players:
Key companies covered as a part of this study include Ashok Leyland, BAIC Group, BYD Motors Inc, Daimler AG, Dongfeng Motor Corporation, Ford Motor Company, Gaz Group, General Motors Company, Honda Motor Company, Hyundai Motor Company, Isuzu Motors Ltd, Mahindra & Mahindra, Nissan Motor Company Ltd, Renault Group, Rivian Automotive LLC, Tata Motors, Tesla Inc, Toyota Motors, Volkswagen AG, Volvo AB are the major players.