Trend Monitor Light Commercial Vehicle of the Future.

Transcription

1 Consulting Trend Monitor Light Commercial Vehicle of the Future. Optimising Total Cost of Ownership considering future drive concepts and business conditions. A study conducted by MBtech Consulting GmbH.

2 Preface Objective of study 3 Study design and customer segments 4 Industry and product trends as well as conditions Buying criteria and relevance of TCO 6 5 Dear Ladies and Gentlemen, Due to rising vehicle cost the issue of Total Cost of Ownership (TCO) becomes more and more important. High fuel cost, declining purchasing power, but also debates concerning CO 2 emissions fuel a discussion about vehicle acquisition and maintenance cost. As part of the Trend Monitor 2010, we especially focused the study on the segment of light commercial vehicles (LCV). In addition to a TCO-analysis of current drives, the cost of alternative drive concepts are evaluated. Attention is given to the evaluation of technical factors of influence. Willingness to compromise in favour of new technologies Analysis of Total Cost of Ownership (TCO) 7 8 On this base, concrete approaches for the optimisation of TCO throughout the product development process as well as sales and after sales are presented. In summary, the study shows the increasing importance of TCO as a competitive advantage to those involved in transport business. The importance will especially increase with the raising impact of new technologies. TCO - alternative drives 9 Management summary 10 Contact and disclaimer 11 The numerous discussions full of ideas during the conduction of the study underline the importance of the topic. We look forward to a lively exchange of ideas with you. Yours sincerely Stefan Herzog Principal MBtech Consulting GmbH

3 Optimisation of Total Cost of Ownership with new technologies Objective of study The study, Trend Monitor 2010: Light Commercial Vehicle of the Future deals with the optimisation of Total Cost of Ownership (TCO) by using new technologies in the light commercial vehicle segment. TCO prefers to acquisition and maintenance cost over the vehicles lifecycle. This allows evaluating known as well as hidden cost (see figures below). Cost for the vehicle drivers are deliberately excluded in this study as local and segment specific influences would falsify the result. Further individual cost drivers, such as fuel card fees, must be considered individually, if necessary. The study puts emphasis on three key questions: 1. What are the current and future decision criteria for customers of light commercial vehicles (LCV)? 2. How do Total Cost of Ownership influence the purchase decision? 3. How do TCO develop under the influence of new technologies and business conditions? Finally, the study provides important insights of OEMs and body builders in the context of the entire product development process as well as sales and after sales. TCO-content Total Cost of Ownership (TCO) Fixed cost Variable cost Purchase price Insurance fees Fuel Repair Taxes Fleet management Vehicle care Tires Maintenance Others: MOT, smog check 2 3

4 Impact on Total Cost of Ownership by diverse factors TCO-key influence factors Usage Product/Technique TCO Business conditions Scope of study Next to general segment trends in the transporters market, the analysis takes into account three key factors of influence on TCO, which are business conditions, product and technology trends as well as commercial customer usage of the vehicle. The analysis clarifies which important criteria influence the current and future decision process for a specific product and highlights its impact on TCO. Surveyed customer segments In addition to public service providers, logistic companies and retailers are interviewed, as they demand a high proportion of vehicles in the commercial sector. Since the vehicles are often equipped individually, the study covers body builders, too. The study was conducted with a focus on the German market in spring/summer The survey includes the following items: Fleet structure and usage patterns Transparency of current measurement of TCO Identification of buying criteria and especially classification to TCO Willingness to compromise on product and price of future vehicle concepts and technologies Based on usage patterns reference user groups are defined. These groups are taken into account of a detailed and pragmatic TCO-analysis providing the base for a TCOassessment also for alternative drive concepts. Apart from the cost side, these drive concepts are also reviewed in terms of meeting customer requirements. Since the development of the business conditions is uncertain (unpredictable crude oil prices, fiscal policies) scenarios are built to assess the related cost in a future framework. Examined customer segments Public and other services Approx. 24 % market share Body builder A high proportion of vehicles are constructed respectively converted Logistic services Approx. 19 % market share Manufacturing trade Approx. 15 % market share MBtech Consulting Trend Monitor 2010

5 Huge market potential for alternative drive concepts Industry trends and business conditions The year 2009 was not satisfying for the light commercial vehicle segment neither in Germany nor Europe as the economic crisis heavily affected both the supply and the demand side. Fuel types according to gross vehicle weight Gas 1.5 % Gas 0.5 % Petrol 11.5 % Petrol 2.0 % In Germany, sales slumped 25 percent to 167,000 vehicles. Depending on the product portfolio, the manufacturers were differently hit by the crisis. Especially light vehicles close to passenger cars were able to benefit from the scrap bonus initiated by the government. Whereas manufacturers focused on commercial light vehicles had to realise declines in sales up to 30 percent in Germany. Even if continuous growth can be expected for the upcoming years, the level of the record year of 2008 can earliest be reached in New regulation for pollution badges and exhaust systems will enforce this development. The transporter market is dominated by vans with a gross vehicle weight between 2.0 t and 3.5 t holding a market share of around 60 percent. In Germany the VW Transporter, the Mercedes-Benz Sprinter, the Ford Transit and the Fiat Ducato are the most important models in this segment. The higher the total vehicle weight, the more dominant the diesel engine becomes. Slightly more than 97 percent of customers who choose a gross vehicle weight of 2.0 t and higher order a diesel drive. Although low pressure gas (LPG) and natural gas (CNG) is subject to a reduced tax rate, both drive concepts reach only a market share of 0.5 percent. Analysing the retail network it can be stated that Volkswagen has the densest distribution and service network with its 2,000 outlets. The study also points out that specialised commercial vehicle centres, offering specific standards for commercial vehicles services, are in the strategic focus of different manufacturers. Diesel 87.0 % Diesel 97.5 % up to 2.0 t Source: Kraftfahrtbundesamt t Product trends One characteristic of the analysed segment is that an optimisation of development and production cost takes place by manufacturer co-operations. Some offer almost identical products (so-called badge-engineering ) sold under different brand names. In addition, the product life cycle of light commercial vehicles is in average twelve years that might affect the implementation of innovations. Despite the levers for cost optimisations the profitability is comparable to the passenger car segment what can be caused by a relatively small quantity produced. An overall product trend is the over fulfilment of current emission standards. Furthermore, reductions in weight and in fuel consumption can be seen across all brands. In addition to LPG and CNG as alternative drives, electric drive concepts can be spotted on the market. So far, hybrid drives are non-existent in the analysed light commercial vehicle segment. 4 5

6 Manufacturers have to deal with different customer expectations TCO-measured Evaluation with fleet management programmes Cost centre per vehicle Yearly/monthly TCO-analyses Indirect cost (often not measured) Purchasing decision criteria and relevance of TCO Only around 60 percent of the surveyed customers in this segment measure the TCO in detail. Reasons for missing analyses are mostly personnel shortage or the non-existence of tools and instruments. Measuring TCO (all interviewees) 60 % 40 % TCO-not measured Often only fuel cost are measured via fuel cards No separate measurement due to full service leasing contracts Stop measuring because of personnel shortage The buying decision criteria are rated on a scale from 1 (low importance) to 10 (high importance) evaluating customers priorities. The cross-industry analysis proves the degree of reliability, environmental compatibility, availability of spare parts and maintenance costs as the most important decision criteria. The need for vehicle telematics has been rated as rather less important. It is notable that the emphasis on decision criteria varies considerably depending on the user group. While, for example, maintenance costs for the logistic service providers and the manufacturing sector are highly prioritised, public as well as other service providers rate these criteria as significantly less important. Source: MBtech Consulting GmbH Overall, the awareness for the importance of the TCO-issue still appears insufficient. Top 10 decision criteria bandwidth Reliability Environmental compatibility Spare part availability Maintanance cost Acquisition cost Standard safety equipment Shipping volume Payload Goodwill & complaint Breakdown support low Importance high lowest result average result highest result Product Price Place Scale: 1 low importance 10 high importance MBtech Consulting Trend Monitor 2010

7 Differentiated willingness to compromise on product features in favour of new technologies Willingness to compromise in favour of new technologies To assess customer s attitudes towards new technologies, the willingness to compromise was measured by various criteria. Across all user groups a low willingness to compromise can be seen towards safety equipment, cargo volume and load volume. In contrast, all three user groups are willing to restrict the cruise range of the vehicle. While the public service sector generally indicates a higher willingness to agree to a compromise, logistic service providers are more reluctant. In terms of an increase in acquisition cost and in a reduction in maximum speed the willingness to accept limitations varies, too. Overall, most customers accept to charge their vehicles with electricity for a few hours a day. Willingness to compromise in favour of new technologies Willingness to compromise low high Raise in acquisition cost Reduction of payload Reduction of shipping vol. Reduction of cruising range When asked about the most promising technology, the hybrid concept is seen as the most favourable one. Another result is that bio diesel and both low pressure as well as natural gas is seen rather critically due to the lack in resources (bio diesel) respectively insufficient torque power (LPG/CNG). The criterion of infrastructure is judged as insufficient concerning bio diesel and LPG/CNG on the German market. As this issue differs significantly in an international context, it is important to examine its impact for each market individually. Perception of sustainable drive concepts Technology Rating Comment Hybrid Battery based electric vehicle Fuel cell car Bio diesel Gas (LPG, CNG) Vehicles adapted to type of driver very high relevance high relevance Overall positive rating Cruising range and weight is crucial Build up of proper infrastructure doubtful Insufficient availability of resources Insufficient gas station network Depended on surcharge low relevance no relevance Quelle: MBtech Consulting GmbH In summary it can be mentioned that both the decision relevant acquisition criteria and the willingness to accept restrictions in favour of new technologies vary considerably among different industry sectors. Loading time Reduction in ease of use Reduction in top speed Reducing safety equipment An electric drive is only relevant in combination with a leasing contract for batteries. Quote: Fleet manager of a utility company 6 7

8 TCO-balance depends on usage and on vehicle concept Total Cost of Ownership (TCO) analysis To conduct a practical TCO-analysis, three most important models of the segment from different manufacturers are subject to a price analysis. The standard configurations of the different models are adjusted in order to achieve comparable prices. Significant price differences are found in this comparison. In a next step fixed and variable cost are determined for each model. Assessing the product features, it is notable that transporters with identical gross vehicle weight differ significantly concerning payload. Three typical user groups are defined reflecting the questionnaire: Reference User 1: 10,000 km/year Reference User 2: 25,000 km/year Reference User 3: 100,000 km/year Overall, the fuel cost and the vehicle price are most important within the TCO. Depending on the model, fuel cost vary between 17 and 22 percent of the total cost. Regarding users with high kilometrage (see figures below) it is surprising that the model with a very low vehicle price (brand C) underperforms in the TCO-comparison. High fuel consumption, high prices of spare parts and lower maintenance intervals are reasons for this result. The findings suggest that the TCO should be taken into account already during the purchasing decision process and also the acquisition price should not be overrated. The multi-brand comparison presents that the TCO-balance differs depending on usage profile. Due to the importance of TCO for the user groups, both the manufacturer as well as the bodybuilder should reflect the TCO-aspect as early as possible in the product development process. A detailed TCO-analysis is done for these reference users based on mileage and payload. Price-analysis TCO-analysis conventional drive / frequent driver Option 1) Brand A Brand B Brand C ABS Standard Standard Standard ESC Standard Standard Standard Driver airbag Standard Standard Standard Audio system Standard Others Fleet mgmt Maintenance Tires Tax Parking assistant sytem Air condition, manual 1,350 1,480 1,150 Total 2,360 3,361 1,800 1) Prices: net TCO ( /100 km) 10 0 Brand A Brand B Brand C Mean Replacements Assurance Fuel Vehicle MBtech Consulting Trend Monitor 2010

9 TCO-optimisation as an advantage in competition TCO alternative drive concepts Based on the user-profiles and the appropriate kilometrage, different drive concepts are assigned to the identified reference users. These concepts are finally compared with the TCO of a conventional diesel drive. Reference user 1 10,000 km/year Reference user 2 25,000 km/year Reference user 3 100,000 km/year Electric drive (40 kwh) Hybrid (CNG with electric powertrain + 20 kwh HV-battery) Hybrid (CNG with electric powertrain + 10 kwh HV-battery) One result of the analysis is a distinct change in the TCOstructure because of the new drive concepts. On the one hand some components within the vehicle-price like cost of batteries and electric engines have a negative impact on the TCO. On the other hand some cost of maintenance and operations are even better than the cost of today s diesel engines, so these factors are effective in the opposite direction. Under today s conditions the positive factors can reduce, but not fully compensate the cost increasing aspects. The alternative E-/CNG-hybrid drive concept offers economic benefits in particular to users with high kilometrage. Besides other aspects low fuel and maintenance cost account for this result. In a next step scenarios with a horizon over ten years are built to project the future development of potential TCO-drivers. According to these assumptions legal and economic parameters are adjusted. Several levers presented lead to economic advantages of alternative drive concepts, e. g. battery cost, vehicle taxes, fuel prices or a congestion charge, which already exists in London. This leads to the conclusion that alternative drive concepts can be economically feasible depending on utilisation and mileage. Finally the scenario results provide fruitful suggestions to OEM and body builders in the fields of product development, sales and after sales as well as clues to fleet operators on the fleet structure and adjustments in utilisation of the vehicles. It turns out that modern diesel engines, reasoned by high component cost for batteries and electrical engines, remain competitive to today s conditions. TCO-analysis alternative drives Scenarios Cost evaluation Electric Electric CNG Engine -5,000 1,400 Gearing Starter HV-Batterie 1) (40kWh) (20kWh) Electric propulsion 5,000 2,500 Reduction fuel system Others 5,000 5,000 Technology Fuel price Electricity price LPG/CNG price Battery cost Vehicle taxes Congestion charge Development 8 9

10 Management Summary Recommendations 1. Anchor TCO-optimisation in strategic planning and product development 2. Consider heterogeneous customer requirements (end user, bodybuilder) 3. Offer different drive concepts to customers for TCO-optimisation 4. Force lightweight manufacturing and fuel consumption efficient drives 5. Strengthen horizontal and vertical cooperations regarding product development and services 6. Professionalise the commercial vehicle sales and service network focusing alternative drive concepts 7. Offer innovative service concepts like battery leasing and manufacturing Starting point The Trend Monitor 2010 analyses the most important commercial customer groups in the segment of Light Commercial Vehicles (LCV). The study covers also body builders as LCVs are often converted with individual components. Main focus of the study The study puts emphasis on three key questions: What are the most important decision criterias for the different target groups? How important are Total Cost of Ownership (TCO) regarding the purchase decision and which kind of compromise would a customer finally agree upon? And last but not least, do new technologies have an impact on structure and height of the TCO and are alternative drive concepts an economically feasible option? Meaningful results The results reveal that criteria such as reliability, environmental compatibility, spare part availability and maintenance cost are most important to the purchase decision of customers. But due to the heterogeneity of user profiles there are partly significant spreads. In spite of the importance of acquisition and maintenance cost, only 60 percent of the respective customer groups mention to analyse the TCO in detail. Asking customers about the technology concept in the future, hybrid drive concepts get the best results. Using alternative drives customers have got the highest willingness to compromise regarding the charging time of batteries in contrast to topics like payload, safety components and shipping volume. TCO-analysis To compare the TCO of traditional diesel-engine vehicles and innovative technologies, typical customer groups are clustered based upon their usage profiles and matched with the appropriate alternative drive concepts. One result is a distinct change in the TCO-structure because of the new drive concepts. On the one hand some components like cost of batteries and electric engines have a negative impact on the TCO. On the other hand some cost of maintenance and operations are even better than the cost of today s diesel engines. Overall, on actual conditions modern diesel engines remain competitive in the future especially for users with a low kilometrage. However the analysed E-/CNG-drive is even today feasible to users with a kilometrage of more than 100,000 km per year. Future scenario With a ten years horizon the main TCO-drivers are identified and legal as well as economic factors are adapted. Several levers such as the reduction of battery cost, the increasing of taxes and fuel prices or the introduction of congestion charges are presented, which lead to advantages for alternative drives. Finally the scenario results provide fruitful suggestions to OEM and body builders in the fields of product development, sales and after sales as well as clues to fleet operators on the fleet structure and adjustments in utilisation of the vehicles. Due to the heterogeneity of customer needs, there will be no more one-and-only drive system in the transporter segment in the future. MBtech Consulting Trend Monitor 2010

11 Contact Disclaimer: MBtech Consulting GmbH has compiled the contents of the study with the greatest possible diligence, to the best of its knowledge and with the assistance of established scientific methods. All of the information which is not based on historical facts or quoted sources consists of statements or prognoses which, with regard to their correctness, are subject to influences which lie outside the control of MBtech Consulting GmbH. MBtech Consulting GmbH does not assume any responsibility for any damages which occur as a result of decisions which are made on the basis of the contents of this paper. MBtech Consulting Profile: Marc Bayer Director Sales, Marketing and After Sales Consulting MBtech Consulting GmbH Telephone: Mobile: marc.bayer@mbtech-group.com Stefan Herzog Principal After Sales and Downstream Business MBtech Consulting GmbH Telephone: stefan.herzog@mbtech-group.com Martin Schwarz Senior Consultant MBtech Consulting GmbH Telephone: martin.j.schwarz@mbtech-group.com Who we are MBtech Consulting, a subsidiary of the MBtech Group, combines lean consulting know-how and global practical experience to a special knowledge. Regarding the unique integration of strategy and operations MBtech Consulting stands for assessable, realisable and sustainable business strategies. On basis of the lean enterprise approach MBtech Consulting provides process optimisation along the supply chain management and emphasis sustainable global competitiveness. As an international consultancy MBtech Consulting is located in Germany, Austria, Turkey, USA and China and has different project offices worldwide. What we stand for With our implementation-oriented Lean Enterprise approach we offer consulting services covering the entire product development and customer order process. Our success is based on our customers trust in our expertise and the resulting reputation throughout the entire branch. Our clients are our primary focus and they profit from the synergies with the engineering environment of the MBtech Group. We maintain partnerships with leading scientific institutions along with close professional cooperation in all process-relevant research issues. Our consulting team structure is distinguished by consulting competencies combined with a high level of mobility know-how. What we offer Nothing can replace experience and professional competence in consulting. Many of our consultants come from management positions in the automotive industry and from renowned management consulting companies. We know what counts: Implementable concepts and concrete results. MBtech Consulting: The best consulting address on the way to a lean enterprise

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