NA truckmakers outpaced by foreign OEMs: Study

CHICAGO — North American heavy truck makers could be pushed aside in the global market by low-cost manufacturers in emerging markets, says a business consultancy firm.

In four years, truck makers based in countries like China, Russia and India will overtake North American competitors in selling trucks around the world, according to a study by AlixPartners LLP.

The study says that North American-based truck and component builders need to produce simpler designs to generate the 50 percent in cost improvements they need to compete in the global market.

Although North American OEMs are recovering from the global recession and expect to see to return to 2008 sales levels in the next few years, emerging OEMs overseas and in South America are out-gaining them.

European competitors are also in a better position since they’ve done a better job of securing partnerships with low-cost indigenous companies, which expect to boost production by 50 percent in the next four years on the strengthening demand in Asia, Africa, South America and the Mid-East.

There are few “unmarried” partnerships left
with truck makers in emerging markets

North American OEMs are less positioned to capitalize on this foreign growing demand due to high costs, mismatched product types, lack of "value engineering," and a lack of local partners.

In turn, the day is likely approaching  when Chinese and Indian truck makers begin making decent-sized footprints in North America. 

"The key for North American OEMs is to focus on how to quickly gain a foothold in the (so-called) ‘middle segment,’" said Francesco Barosi, a managing director at AlixPartners. "However, that’s all the more difficult today because there are now only a few ‘unmarried’ joint-venture partners left in China, India and Russia to aid in lowering costs.

"That means OEMs, and their suppliers, must focus like never before on whatever is necessary to customize low-cost products for emerging markets. The alternative is to cede half of the global market and, thereby, perhaps a company’s long-term future."

According to AlixPartners, the current predicament of North American OEMs and the growth prospects for the commercial vehicle market globally put immediate pressure on companies to engage in," a systematic method to improve the value of products by a close examination of function, on a global level.

— with files from Truckinginfo.com