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Z: Commercial Vehicle Industry > Core Challenges for CV OEMs > Flashcards

Core Challenges for CV OEMs Flashcards

1
Q

Three key challenge areas

A
  • Macro economical challenges
  • Customer-related challenges
  • Technical and regulatory challenges
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2
Q

Key macro economical challenges

A
  • Highly cyclical CV market

- Ongoing globalization in the CV market

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3
Q

Key customer-related challenges

A
  • Heterogenic customer-specific product requirements
  • Strong TCO driven product design
  • Rising demand on offerings optimizing customer value chain
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4
Q

Key technical and regulatory challenges

A
  • connectivity and digitalization
  • increasing importance of electrification
  • advancing emergence of autonomous driving
  • tightening of regulation especially concerning emission & safety
  • high investment needs for future product development
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5
Q

Are the European and North American markets correlated in terms of CV sales?

A

Yes

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6
Q

Are truck sales highly correlated to the GDP?

A

Yes, in developed markets

–> Need countermeasures to overcome cyclic market environment

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7
Q

When did Europe have industrial peaks and when significant decreases in truck sales?

A
  • Europe with industry peaks in 2000, 2007, 2011, 2019

- Significant decrease of truck sales in 2009

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8
Q

How are the percent swings of the CV market compared to the GDP changes?

A

Higher. (larger beta)

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9
Q

V Scenario

A
  • GDP level: Return to pre-shock level trend and growth rate (same slope)
  • GDP growth: growth overshoots on rebound and then levels back to former GDP growth (Shape: down 2%, up 4%, and then down 2%).

Examples:
- Classic economic shock leading to an intertemporal displacement of demand, resume original output path.

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10
Q

U Scenario

A
  • GDP level: Growth resumes at lower level (trend); but at pre-shock growth rate
  • GDP Growth: Lost output during recession is permanently lost, but no perpetual loss (Downward V shape GDP growth for a few time periods; negative then positive slope and then same GDP growth again).

Example:
- A shock that breaks growth trend, even as trend growth remains same - typically financial recession or major public error

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11
Q

L Scenario

A

GDP levels: Growth resumes at lower level (trend) and at lower growth rate (slope)
GDP growth: Loss in output perpetuates (shape: down 2% up 1.5%, then it stays at that gdp growth).

Example:
- Shock that perpetually breaks a part of the growth model. A structural impact that shifts the output path lower and establishes a lower growth rate.

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12
Q

How does the economic effect of Covid-19 compare to other flues?

A

Unlike covid-19 past flues have all been v-shaped

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13
Q

Expected sales decrease in 2020

A

10-18% with pessimistic scenario suggesting up to 28% decline

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14
Q

In which region where sales expected to decrease most during 2020?

A

Most in Europe like 30-40%. Second US and in China only 0-5% decline in sales.

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15
Q

TCO breakdown in Germany

A 
Driver 34%
Fuel 25%
Admin 11%
Toll 10%
Depreciation 9%
Repair and maintenance 7%
Insurance and taxes 4%
--> Revenue = 98% costs; 2% margin
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16
Q

Customers have a pressure to reduce costs. This can be achieved by:

A
  • efficient planning and dispatching
  • driver monitoring and customised training
  • route optimization
  • intelligent maintenance scheduling
17
Q

Options for the customer to increase revenue

A
  • short-term management of idle capacity
  • long-term mitigation of network imbalances (contract)
  • better access to profitable loads
18
Q

What is important to customers next to TCO?

A

Additional non-and vehicle-related services and products are increasingly requested.
- Economic benefit along value chain including additional revenue streams: Like overall effectiveness and additional services

19
Q

What is meant with overall effectiveness?

A
  • Vehicle utilization
  • idle times
  • sustainability
  • fill rates of trucks
  • personell productivity
20
Q

What is meant by additional services?

A
  • security & safety
  • predictive maintenance
  • optimized interface
  • load monitoring
21
Q

Which regulation was targeted at pollutants?

A

Euro VI

22
Q

Which pollutants were reduced by min 85% to 97%

A

CO, PM, HC, NOx

  • carbon monoxide
  • Fine particulate matter
  • Hydrocarbons, or more appropriately organic emissions, are the consequence of incomplete combustion of the hydrocarbon fuel
  • Nitrogen Oxides are a family of poisonous, highly reactive gases
23
Q

What will come beyond Euro VI?

A
  • further reduction is difficult, costly, and may lead to increased fuel consumption (C02 emission)
  • Post Euro VI standards are likely to focus on real-world emissions.
  • new standards are expected to take a more holistic view, measuring emissions in-use or by use-case (real-world)
24
Q

Example of new regulations

A
  • China VI-b standards to be implemented from 2023 already leading the way with more stringent in-use testing and monitoring requirements
25
Q

Will Euro VI and equivalents soon become compulsory in all major truck markets?

A

Yes. In Europe since 2014 already. In north america since 2010.
Brazil coming in 2023.
Russia, India, China 2021.

26
Q

What is special about India when it comes to emission regulation?

A

They move directly from Euro IV to Euro VI

27
Q

Are emerging markets adopting regulations early?

A

No. Emerging markets emissions norm implementation historically often with delay.

28
Q

What is the 2018 European Commission legislative proposal for heavy duty CO2 emissions about?

A
  • reduction from 2019 baseline
  • incentives for zero and low-emission vehicles, relaxed length limits, improved cabins
  • 15% lower emissions by 2025
  • 30% lower emissions by 2030 (cumulative)
  • -> China and US have similar policies
29
Q

What to do about the high investments needed for technological innovation?

A

The industry needs to recover their investments with an approximately similar amount of vehicles sold.

30
Q

What do customers want regarding TCO?

A

A significant decline of TCO.

Also additional services and products to reduce related cost positions.

31
Q

What are the key technological developments?

A
  • Connectivity and digitization
  • electrification
  • autonomous driving

Z: Commercial Vehicle Industry (12 decks)

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