Light through the darkness

November 18, 2020

The global automotive industry is experiencing unprecedented challenges, but e-commerce and connectivity will continue to drive the light commercial vehicle (LCV) market. Closer to home, things are also on the rise

Frost & Sullivan’s recent analysis, “Global Light Commercial Vehicle Market Outlook, 2020”, finds that global sales of LCVs are projected to reach 9,49 million units in 2020, with pickups (or, if you prefer, bakkies) contributing 4,62 million units.

The international consulting firm states that the global economic impact of Covid-19 caused the market to decline by 19% in LCV sales – worldwide – from 11,72 million units in 2019. The European market is the worst hit, as countries such as Italy and Spain are facing an average decline in LCV sales of 35% to 50% in 2020.

“Strong stimulus packages from the governments will be necessary to support the economy and cope with low business confidence and a high unemployment rate, which stemmed from nationwide lockdowns during the pandemic,” says Marshall Martin, Frost & Sullivan’s automotive and transportation analyst. “The 2020 slowdown will be particularly pronounced across advanced economies such as the US, Germany, Italy and Japan.”

E-commerce and connectivity will continue to drive the global LCV market, as last-mile delivery and electrification are expected to grow in influence in the coming years. And with restrictions on geographical movement during the lockdowns, e-commerce and last-mile delivery applications saw a spike in demand to deliver essentials at doorsteps.

Martin adds: “Electric light commercial vehicles (eLCVs) will continue to gain prominence, with a slew of launches expected until 2023. Emerging trends in the market, such as connectivity, advanced safety and autonomous features, offer great opportunities for the growth of the global LCV market in the next three to five years.”

The market outlook in key regional markets will vary considerably. These include:

North America: Sales of LCVs are expected to be on the decline for the rest of the year, with full-size pickups expected to be the most affected because of the slowdown in the construction sector.

Europe: The region is expected to have a fairly good penetration of eLCVs compared to other regions.

India: The growing penetration of e-commerce and last-mile connectivity will drive the segment to experience robust growth in the next five to 10 years.

Latin America: The region is expected to remain under downward pressure with falling commodity prices, and the market will likely decline by 17% during this year.

Guld Cooperation Council (GCC – which includes Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman): Despite the record-low oil prices this year, the market in the GCC is experiencing a boost in e-commerce, which provides opportunities in the region’s logistics sector.

Closer to home the LCV market had to weather some major storms as all industries faced economic challenges and uncertainty, even before the start of the national lockdown.

According to the National Association of Automobile Manufacturers of South Africa (NAAMSA,) domestic sales of new LCVs, bakkies and mini-buses at 9 425 units during March 2020 had recorded a significant decline of 5 570 units (or a fall of 37,1%) from 14 995 LCVs sold during the corresponding month last year.

April, as was to be expected, saw the biggest decline at 318 units sold (a fall of 96,8% or 9 494 units) from the 9 812 LCVs sold over the same period last year.

From May onward, the numbers began to climb, as 3 073 units were sold during this month – still a huge decline of 9 128 units (or 74,8%) from the 12 201 units sold during May, 2019.

In June the gap closed to a fall of 29,7% – as 10 189 units were sold during this month (4 308 units down from the 14 497 LCVs sold during the corresponding month last year).

July delivered a 10% improvement, as 11 123 LCVs were sold (a decline of 2 736 units or a fall of 19,7% from the 13 859 LCVs sold during July, 2019).

August showed a 0,3% improvement with 11 336 units being sold – a decline of 2 719 LCVs or a fall of 19,4% from the 14 055 units sold during the corresponding month last year.

During September the figures reached single-digits as a decline of 1 202 units – or 8,9% – was recorded, with 12 267 units being sold versus the 13 469 LCVs during September, 2019.

“The easing of lockdown restrictions to level 1 during the month contributed to the uptick in business activity – and new vehicle demand – and drove the further improvement in business conditions in the South African manufacturing sector,” NAAMSA reports.

LCVs, bakkies and mini-buses showed a year-to-date (YTD) decline of 33,3% compared to YTD for September, 2019, however. (These were the latest figures available at the time of writing this article.)

“Business conditions remain far from normal and the new vehicle market is expected to remain under pressure in the current economic scenario,” NAAMSA points out.

Only time will tell how long the present challenges will have to be endured, but with new developments on the horizon and the rise of last-mile delivery and e-commerce, a little light is shining through the darkness.

Going light to remain on sale

Suzuki has sidestepped Europe’s latest emissions regulations by unveiling a light commercial vehicle version of its Jimny. “It’s pretty much identical to the standard off-roader – and, most importantly, it will allow Suzuki to continue selling the car in Europe, even in the wake of the EU’s more stringent emissions regulations,” reports AutoExpress.co.uk writer Luke Wilkinson.

Sales are expected to start early next year.

“From the outside, the Suzuki Jimny commercial looks the same as the passenger-carrying model,” notes Wilkinson. “However, to fulfil its new-found brief as a light van, Suzuki has swapped the standard Jimny’s tiny rear bench seat for a partitioned 863-litre load bay – which is 33 litres more than the passenger model offered with the back row folded.”

The new LCV version allows Suzuki to exploit a loophole in the current European emissions regulations. “The standard Jimny was recently removed from sale, as its engine bumped Suzuki’s average fleet-wide CO2 emissions figure over the European Parliament’s recently introduced 95 g/km threshold.

“However, that 95 g/km figure only applies to passenger vehicles. Commercial vehicles have a far more lenient target figure of 147 g/km of CO2 which, rather conveniently, the Jimny’s 1,5-litre four-cylinder petrol engine comes closer to matching – allowing Suzuki to eke a few more sales out of its ever-popular off-roader.”

The LCV version features the same engine and standard equipment as the passenger model.

Sameer Contractor, a writer for CarAndBike.com, adds that those buying the Jimny will be eligible to claim VAT on the purchase, in-line with the tax norms in Europe.

It’s a pity that South Africans won’t be able to add a “tax-free” Jimny to their fleets.