Frost & Sullivan Executive Summary-North Africa … · Market Overview 40 External Challenges ......

Strategic Outlook of Select North African (Algeria, Morocco, and Egypt) Light, Medium, and Heavy Commercial Vehicle Markets

Sales of Commercial Vehicles to Nearly Double Over 2012-2018 Period

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EXECUTIVE SUMMARY

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Contents

Section Slide Numbers

Executive Summary 3

Research Scope, Objectives, Methodology, and Background 24

Definitions and Segmentation 29

Megatrends in North Africa 32

Market Overview 40

External Challenges: Drivers and Restraints—Total Market 46

Market Analysis –North African Truck & Bus Market 53

Light, Medium and Heavy Truck Segment Breakdown 57

Bus Segment Breakdown 69

Egypt Country Analysis 80

Morocco Country Analysis 107

Algeria Country Analysis 134

Conclusion & Future Outlook 160

Appendix 166

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Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis.

Executive Summary- North Africa Market ForecastNorth Africa emerging as a strategic hotspot for global CV manufacturers; Algeria leads the region with close to 51 per cent share of the total CV market

0

5,000

10,000

15,000

20,000

25,000

Algeria Egypt Morocco

Bus HD Trucks MD Trucks LD Trucls

25.8%

55.5%

2012

27.7%

24.6%

15.4%

39,580

Sa

les

Un

its

Light Duty Trucks (LD 3.5T to 6.5T)

Medium Duty Trucks (MD 6.6 T to 16 T)

Heavy Duty Trucks (HD >16 T)

Medium Duty Bus (MD >25 to 45 seats)

Heavy Duty Bus (HD >45 seats)

2020

74,927

23.7%

28.5%

17%

Truck & Bus Market: Country wise Segment Market Shares, North Africa, 2012 & 2020

32.3%

65.1%

67.6%

34.8%

14.4%

6.5%

34.8%

18.7%

20.5%

25.9%

15.7%

30.8%

8.3% CAGR (Growth)

2012 Country Shares

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Source: Frost & Sullivan analysis.

Executive Summary- North African Truck & Bus Market 2012

Total Truck: 33,487

LD Trucks: 9,754

MD Trucks: 10,996

HD Trucks: 12,737

20

12

Sa

les

20

20

Sa

les

Total Truck: 62,152

LD Trucks: 23,125

MD Trucks: 17,737

HD Trucks: 21,290

CAGR (2012-2017): 8.0 per cent

Total Bus: 6,093

MD Bus: 4,874

HD Bus: 1,219

20

12

Sa

les

20

20

Sa

les Total Bus: 12,775

MD Bus: 10,220

HD Bus: 2,555

CAGR (2012-2017): 9.7 per cent

• Introduction of CNG operated buses.• Heavy demand for buses, primarily

for public transport

Ke

y

Tre

nd

s

Ke

y

Tre

nd

s • Rising flow of investment toassemble/manufacture vehicles

• Upcoming transport corridorsconnecting North African countries

Chevrolet17.0%

Mitsubishi12.6%

Isuzu10.8%

Shaanxi10.5%

Renault8.8%

Hyundai9.1%

Foton motors7.5%

Tata Daewoo3.7%MAN

3.5%

Mercedes3.3%

JAC2.9%

Volvo3.8%

Scania2.2%

DAF1.8%Iveco

1.1%Others 1.5%

Chevrolet24.0%

Mercedes19.7%

Hyundai13.1%

Toyota11.8%

Mitsubishi8.0% Volvo

5.0%

King long9.2%

Tata Daewoo4.6%

MAN2.8%

Scania1.8%

Truck & Bus Market: Truck Segment Market Share , North Africa, 2012

Truck & Bus Market: Bus Segment Market Share, North Africa, 2012

Total: 33,487

Total: 6,093

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Stable IncreasingDecreasing

Forecast Period Market Growth Rate

8.3 per cent

(CAGR, 2012-2020)

Market Stage

Growth

Market Units

39,580

(2012)

Market Units at End of Forecast Period

74,927

(2020)

Base Year Market Growth Rate

10.6

per cent

Truck and Bus Market: North Africa, 2012 – 2020Market Overview

Market Concentration

57.3

per cent(per cent of market share held by top 5 companies)

Number of Competitors

23

(active market competitors in base year)

Executive Summary- Market Engineering MeasurementsTotal market to grow at a CAGR of 8.3 per cent, reaching 74,927 Units by 2020

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Executive Summary- Key Findings for Truck MarketTruck market is likely to grow at a CAGR of 8.0 per cent reaching 62,152 units in 2020

Demand for new HD trucks is likely to surge due to the implementation of emission norms post 2015,resulting in a decline of used truck imports. The market for new trucks is likely to grow at a CAGR of8.0 per cent, driven primarily by HD and MD truck segments.

1

Truck and Bus Market: Key Findings for Trucks, North Africa, 2012 – 2020

North Africa is likely to emerge as an assembly/production and logistics hub for Middle East andEurope, largely influenced by the advantageous geopolitical situation and low export tax structuredue to EU-North Africa Customs Union. However, OEMs are likely to concentrate more on meetingdomestic demand, rather than export.

2

The dominance of foreign OEMs is likely to continue in the future as well. The top five OEMs areChevrolet, Mitsubishi Fuso, Isuzu, Shaanxi, Hyundai and these constitute close to 57.3 per cent ofthe total market in 2012.

3

OEMs are expected to invest more to develop assembly and local R&D facilities, also an increase in

assembly locations to increase from 18 to 25.

OEMs are expected to invest more to develop assembly and local R&D facilities, also an increase inthe expense on R&D activity will avail exemption from corporate tax. Availability of low cost laboracross the region is likely to push OEMs to invest in assembly/manufacturing facilities. Number ofassembly locations to increase from 18 to 25.

4

Due to strict import policies and high tax rates in case of used truck imports, Algeria and Morocco arelikely to experience demand for new medium and heavy duty trucks.

5

North Africa is likely to adopt Euro 3/4 norms from 2017. Since, EU & NA would have switched to thisstandard prior to North Africa, foreign OEMs will already possess required expertise andtechnologies.

6


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Executive Summary- Key Findings for Bus MarketBus market is expected to grow at a CAGR of 9.7 per cent reaching 12,775 units by 2020

The sales volume of bus market is likely to reach 12,775 units by 2020 with a CAGR of 9.7 per cent.The market is likely to experience demand for medium duty buses driven by strengthening tourismsector and growth in public transport.

1

Truck and Bus Market: Key Findings for Bus, North Africa, 2012 – 2020

Global OEM dominance is likely to continue in North Africa. Currently Chevrolet, Mercedes, Hyundai,

and early mover advantage.

Global OEM dominance is likely to continue in North Africa. Currently Chevrolet, Mercedes, Hyundai,Toyota and Mitsubishi Fuso constitute a combined market share of 76.6 per cent. However, ChineseOEMs are expected to hold major market share in future due to their low cost development modeland early mover advantage.

2

Foreign OEMs are likely to leverage their global platforms to produce and develop trucks and busesin North Africa and will also look to maximize export, to benefit from the low export tax provision ofEU-North Africa Custom Union.

3

Legislations are likely to be inclined towards greener transport solutions, mandating cleaner fuel likeCNG for urban transport. All major OEMs are expected to strengthen their product portfolio with CNGvariants.

4

North Africa emerging as a major tourist destination will positively impact the growth of bus market.The bus market is expected to experience growth owing to an increasing urban population and asurge in government spending on urban public transport systems.

5

North Africa is showing potential for application of BRT systems, especially in Cairo, Rabat etc. Thiswill challenge OEMs in developing a wider portfolio of bus solutions encompassing mini-buses to full-scale BRT buses.

6


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Executive Summary- North African New Truck and Bus Market ForecastBus-Truck sales ratio to remain at 1:5 as total Commercial Vehicle (CV) sales projected to grow to nearly 75 thousand

Truck & Bus Market: Unit Shipment Forecast, North Africa, 2012 – 2020


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2012 2013 2014 2015 2016 2017 2020

Un

it S

ale

s

Truck Bus

CAGR – 8.3%

• Emphasis on transport corridors with an investment of $500 bn and overall development of the NorthAfrican region is likely to boost sales of commercial vehicles.

• Algeria, Egypt and Morocco are offering interesting opportunities for OEMs to leverage a low cost basefor assembly, bolstering regional CV sales.

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Executive Summary- North African Truck Market ForecastDemand from HD truck segment is likely to strengthen by 2020 due to shift in consumer preference towards higher payload trucks coupled with stricter import policy for used trucks

Truck & Bus Market: Truck Unit Shipment Forecast, North Africa, 2012 – 2020


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2012 2013 2014 2015 2016 2017 2020

Un

it S

ale

s

LD Trucks MD Trucks HD Trucks

• Post 2015 North African market is likely to experience noticeable demand for new HD trucks due totougher emission regulations

CAGR – 8.0%

Year

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0 0 0 0 0 0 00

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2012 2013 2014 2015 2016 2017 2020

Un

it S

ale

s

<25 Seats* MD Bus HD Bus

CAGR – 9.7%

Truck & Bus Market: Bus, Unit Shipment Forecast, North Africa, 2012 – 2020

• (*) Less than 25 seats are categorised as vans and mini vans and not categorised under buses.Vehicles with 25 seats and above are categorised as buses. Only buses are considered under the study


Year

Executive Summary- North African Bus Market ForecastRapid urbanisation and expanding tourism sector in the North African region is likely to generate heavy demand for buses

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Iveco

Renault Nissan

Others

DAF

Scania

JAC

Mercedes

MAN

Tata Daewoo

Volvo

Renault Trucks

Foton Motors

Hyundai

Shaanxi

Isuzu

Mistsubishi Fuso

Chevrolet

LD Trucks

MD Trucks

HD Trucks

Chinese OEMs are

expected to continue

record growth with

expansion in North Africa

GM, the parent company

of Chevrolet is likely to

expand its capacity in

North Africa with focus on

Egyptian market

Units

Truck and Bus Market: Truck Segment, Sales by OEM & Sub Segment, North Africa, 2012

Trucks - OEM Sales Performance 2012GM’s market leadership can be attributed to its strong product portfolio and dealer network; Chinese OEMs rapidly gaining traction, while Japanese OEMs continue enjoying strong positions

*Others Include: (Ford, FAW, Hino, JMC Note: All figures are rounded. The base year is 2012, Frost & Sullivan analysis.

Total: 33,487 Units

Iveco leveraging China developed MD-HD low-cost

truck platforms to rapidly gain market share

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Others

Isuzu

Scania

MAN

Tata Daewoo

Volvo

Mitsubishi

King long

Toyota

Hyundai

Mercedes

Chevrolet

MD Bus

HD Bus

Bus market is primarily

dominated by US and

European OEMs due to

their early establishment in

North Africa

Truck & Bus Market: Bus Segment, Sales by OEM & Sub Segment, North Africa, 2012

Bus - OEM Sales Performance 2012 Higher truck sales and strong presence in the bus market give Chevrolet a clear edge over its rivals as market leader

*Others Include: Nissan, Temsa, VW Note: All figures are rounded. The base year is 2012. Source, Frost & Sullivan analysis.

Total: 6,093 Units Units

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Executive Summary - Competitive Benchmarking on the Basis of Segments: Downstream impact of polarisation in truck segment evident in OEMs product

portfolios

LD Truck MD Truck HD Truck Bus

Chevrolet

Hyundai

Mitsubishi

Mercedes

Renault

Scania

Iveco

JAC

Volvo

Tata Daewoo

Foton Motors

DAF

Isuzu


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Region OEMs CKD vs CBU Dealer Distributor/Assembler

Country of Origin Impact

Egypt

Chevrolet CKD Assembly Al Mansour Automotive

American manufacturershold close to 70 per cent

market share, leading in LDtruck and bus sales.

Hyundai CKD Assembly EIM(Egyptian International Motors)

Iveco CBU Imports Direct Sales

JAC CKD Assembly Direct Sales

Mercedes CKD Assembly MCV

Mitsubishi CKD Assembly Ghabbour Auto

Morocco

Isuzu CBU Imports CFAO Motors

Japanese and European OEMs hold close to 46 per

cent and 44 per cent market share respectively in trucks

and bus sales.

MAN CBU Imports Direct Sales

Mitsubishi Fuso CKD Assembly Auto Hall

Renault CBU Imports Direct Sales

Scania CBU Imports Direct Sales

Volvo CBU Imports Direct Sales

Algeria

Foton Motors CBU Imports KIV

Chinese manufacturers lead the market with 35 per cent market share followed by

European manufacturers with 29 per cent market share.

Isuzu CBU Imports DIAMAL

JAC CBU Imports EMIN Auto

Hyundai CBU Imports Direct Sales

Volvo CBU imports Altruck Company

MAN CBU Imports MTC

Renault CBU Imports 10 Dealers across Algeria

Tata Daewoo CBU Imports Elsecom

Executive Summary - Truck and Bus Market : CKD vs CBUDespite sub-optimal dealer network, Chinese vehicles are in greater demand across the region owing to lower price and increasing footprint of Chinese businesses in this region

Source: Frost & Sullivan analysis.*CKD (Complete knock down), CBU (Complete Built Unit)

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Key Selling Points

• Extremely fuel efficient engine with latest

technology.

• Light Electronic (LE) version that is adapted for use in

difficult environments

• Built with Ultra steel quality

• All-inclusive serving covers parts and labor at

predetermined prices. Operations are carried out by

qualified experts, using Renault truck’s approved

parts

• Heavy-duty load capacity

Price range: $82,425–$104,845

Key Features Technology

Engine DXi 11 330-436 HP

Transmission/

Fuel

5 Speed Manual/Diesel, Direct

Injection

Power/GVW 330-436 HP/26T onwards

SafetyElectronic Braking System (EBS 5),

ABS, APM(Air product management)

Comfort/

Convenience

Ergonomic dashboard, broad

windshield and rear side windows,

non-slip steps

Key Applications

• Logistics

• Long distance heavy equipment transport

• General cargo applications such as log transport

• Construction material , cement , building material

transport

• Multifunctional applications

Winning Formula

• Long established brand name

• Safety and driver oriented comfort

• Heavy duty load capacity

• On highway service provision

• Availability of spare parts and after sales service

Executive Summary- Best Selling Truck Case Study in AlgeriaRenault Trucks Kerax Series-Renault’s long history in the region and strong dealer network provides it with an edge over their competitors in Algeria

Source: Multiple Sources, Frost & Sullivan analysis.

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SStrengths

OOpportunities

TThreats

WWeaknesses

• Global reconstruction of productioncenters following global economiccrisis and high potential to becomeassembly base courtesy ofgeographic advantage andinvestment incentives.

• High export potential by increasingforeign demand on commercialand public transportation vehicles.

• High growth potential in domesticmarket coupled with strong FDIpotential.

• Bureaucracy in export and import.• Import of used vehicles from EU.• Vagueness in new legislations

about environmental laws andenergy efficiency.

• Lack of alternative export marketand dependency on EU marketsdue to geographical constraints.

• Low cost production capability ofChina, India and EasternEuropean countries.

• High tax burden for CBU imports.• Lack of new regulations for low

carbon emission and safetyregulations.

• Non-integrated marketingorganization between key and subindustries.

• Lack of component suppliercommunity, hence foreign sourcedependency.

• Lack of domestic design capability inengine and transmission technology.

• Stable long-term geopolitical outlook.• Availability of low labor costs and

favorable assembly conditions.• Low export tax courtesy of customs

union agreement with EU.• Strong global brand presence.• Strong focus on production in future.• Strength especially in domestic public

transportation vehicles.

Executive Summary- SWOT Analysis: North African Truck and Bus Market


Truck and Bus Market: SWOT Analysis, North Africa, 2012

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Executive Summary- Key Conclusions and Future Outlook for TrucksBrightening economic, geopolitical scenarios and availability of low cost labor offer North Africa a great potential to become an assembly and logistics hub for Sub-Saharan Africa, Middle East and Europe.

Parameters Current Future

Market Status

• Total sales for truck amounts to 33,487 units in 2012. LD trucks 9,754 units, MD trucks 10,996 and HD trucks 12,737

• Market is slated for robust growth with new FDIs and government investments.

• Expected to experience a stable growth with 8.6 per cent CAGR for trucks despite global and European economic crisis.

Competition

• Chevrolet, Renault, Mitsubishi and Isuzu dominate the North African market. Established dealership network, strong after-sales, reliable/robust product offerings remains the key selling points.

• Market penetration with setting up of assembly plants supply makes the difference in competitiveness. This situation is expected to shift towards local production for cost effectiveness. On the other hand, some OEMs such as IVECO, Volvo, Daimler etc are expected to leverage BRIC market developed models and platforms for market share expansion

Solutions

• Fuel efficient CV that are price competitive and have strong dealership / service networks to support the demand and after sales solutions such as availability of stock and spare parts.

• Liberalization of the markets will result in further FDI and bringing in new technologies.

Barriers to Entry

• The truck market is dominated by Japanese and US OEMs that have established facilities well around the region. New entrant/competitors will face challenges trying to tap into the market that is dominated with well established brands and comprehensive service chains.

• The decision of EU in April 2011 to relax requirement on rules of origin for North Africa allows exports from North Africa to source products notably from China while still benefitting from preferential agreement, will provide an additional carrot to attract investors to establish factories in the region. Hence, benefiting overall production and boosting plant capabilities.


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Executive Summary- Key Conclusions and Future Outlook for BusesRapid urbanization and flourishing tourism industry will drive the bus market in the region

Parameters Current Future

Market Status

• The total sales for bus amounts to 6,093 units in 2012. Egypt leads in the sales of new buses with 2012 sales of 3,018 units.

• Market is slated for robust growth with new FDIs and government investments

• Expected to experience a stable growth with 10.3 per cent CAGR for buses despite global and European economic crisis.

Competition

• Japanese and European brands are heavily dominant in the North African region with a market share of 36 and 33 per cent respectively, offering the widest range of buses in Egypt and Algeria, appealing to different necessities of the customers.

• OEMs will bring new investments to increase assembly in the local region to not only meet domestic demand, but also to meet the export orders.

Solutions• Introduction of cheaper alternative fuel such as CNG

for buses are means to attract price driven consumers.

• Bus rapid transit, sub-25 passenger segments driven by advanced powertrain fuels could prove to be a viable solution for this region

Barriers to Entry

• Bus market is dominated by Japanese and European brands that have established well around the region. New entrant/competitors will face challenges trying to tap into the dominated market.

• The decision of EU in April 2011 to relax requirement on rules of origin for North Africa allows exports from North Africa to source products notably from China while still benefitting from preferential agreement, will provide an additional carrot to attract investors to establish factories in the region. Hence, benefiting overall production and boosting plant capabilities.


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Research Scope, Objectives, Background, and Methodology

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Research Scope

Trucks and BusTrucks and BusVehicle Type

2013 to 2017 and 20202013 to 2017 and 2020Forecast Period

2008 to 2017 and 20202008 to 2017 and 2020Study Period

20122012Base Year

North Africa (Algeria, Egypt, Morocco)North Africa (Algeria, Egypt, Morocco)Geographical Scope

Market Segment

2008 2009 2010 2011 2012

Trucks 33,516 30,316 28,456 30,469 33,487

Bus 4,527 4,752 5,140 5,265 6,093

Total 38,043 35,068 33,596 35,734 39,580

New Truck and Bus Market: Unit Shipments, North Africa, 2008-2012


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Research Aims and Objectives

Source: Frost & Sullivan research.

Objective

Understand the macro trends, technology and market trends in the North African Light, Mediumand Heavy Duty Truck and Bus market.

To outline market drivers and restraints, industry challenges of the North African Light, Medium and Heavy Duty Truck and Bus market.

To provide market size and forecasts for truck, bus market by OEM and by segments.

To provide a comprehensive quantitative forecast of the industry including market shares of key participants and dealership analysis.

Aim

The aim of this study is to research, analyse, and forecast the North African Light, Medium andHeavy Duty Truck and Bus market.

Compare and analyze the key competitors in the market, and understand their strategies.

Provide a strategic analysis of the commercial vehicles market from an OEM’s perspective

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How are CV’s classified and how is the market structured?

Key Questions this Study Will Answer

Who are the market leaders and what are their market shares?

What are the technology trends?

Is there potential for growth within the market?

How is the economics environment impacting the sales and production of commercial vehicles?

Truck and Bus Market: Key Questions This Study Will Answer, North Africa, 2012


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Research Methodology: Frost & Sullivan’s research services are based on secondary and primary

research data.

Secondary Research: Extraction of information from existing reports and project material within the

Frost & Sullivan database, to include data and information gathered form technical papers, specialized

magazines, seminars and internet research.

Primary Research: Many interviews have been conducted over the phone by senior

consultants/industry analysts with original equipment suppliers, regulation authorities, governmental

statistics department and distributors. Primary research has accounted for 70.0 per cent of the total

research.

Research Methodology


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Definitions and Segmentation

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Key Industry Participants

OEM

Chevrolet

Mitsubishi Fuso

Isuzu

Toyota

Hyundai

MAN

Mercedes

Volvo

Scania

Renault Nissan

Renault Trucks

JAC

Ford

Shaanxi

Foton Motors

Hino

DAF

IvecoSource: Frost & Sullivan analysis.

Truck and Bus Market: Key Industry Participants, North Africa, 2012

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Vehicle Definitions

• Commercial Vehicles are defined as trucks and buses that are used for transporting goods, materials

and people.

• Based on gross vehicle weight (GVW), which is the combined weight of the vehicle and load,

commercial vehicles are classified into four segments: Light Duty Trucks (LDs), Medium Duty Trucks

(MDs), Heavy Duty trucks (HDs), Medium Duty (MD) & Heavy Duty (HD) Bus

Truck & Bus Market: Overall Commercial Vehicle Segment, North Africa, 2012

• This study covers light duty trucks, medium duty trucks, heavy duty trucks, and buses..

• Buses can be categorized into Medium Duty and Heavy Duty.

• The base year for the analysis is 2012 and the forecast period is 2013–2017 and 2020..

• This study focuses on the Algeria, Egypt and Morocco trucks and bus market.

Light Trucks Medium Trucks Heavy Trucks Bus

3.5 ton ≤ GVW ≤ 6.5 ton

6.6 ton ≤ GVW ≤ 16 ton GVW greater than 16 ton MD Bus HD Bus

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Market Engineering Methodology

One of Frost & Sullivan’s core deliverables

is its Market Engineering studies. They

are based on our proprietary Market

Engineering Methodology. This approach,

developed across the 50 years of

experience assessing global markets,

applies engineering rigor to the often

nebulous art of market forecasting and

interpretation.

A detailed description of the methodology

can be found here.

Source: Frost & Sullivan research

28

FOR MORE INFORMATION, CONTACT

Subhash Joshi

Industry Manager

Automotive & Transportation Practice

Middle East, North Africa and South Asia

Frost & Sullivan International Inc.

210, EIB-4 BT Building

Dubai Internet City

PO Box: 502395

Dubai, United Arab Emirates

Ph: +971 4 4331 893

Tanu Chopra

Senior Manager- Corporate Communications

Middle East & North Africa

Ph: +91 22 6607 2046

Email: [email protected]

Website: www.frost.com

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THANK YOU

Frost & Sullivan Executive Summary-North Africa … · Market Overview 40 External Challenges ......

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