Growth and Innovation for the EU LCV market

With the support and expertise of market research specialist Dataforce, we are once again able to turn our spotlight against the True Fleet LCV market in Europe and garner some valuable insights into just how things are shaping up so far in 2017.

Within the EU-16 countries we see a varied result for January to June 2017 with the majority able to generate a positive growth but with 6 countries returning a negative growth. However, the LCV Fleet market has grown by 2.4% over 2016’s comparable months with 681,000 registrations. For the EU-5 which makes up 73.6% of the EU-16’s Fleet LCV volume it has also been a mixed bag with France, Germany and Spain all managing an increase for January to June but negative growth from both Italy and the UK.

France continues to dominate the LCV market place in terms of volume, helped by the prevalence of passenger car models (26.7%) registered and used as an LCV, with the next nearest country (UK) a little over 35,000 registrations behind. In 2016 this gap was much closer with around 22,000 registrations separating 1^st and 2^nd place.

The Manufacturers share of the EU-16 also remains fairly stable when compared against 2016, despite some minor changes. Peugeot was the largest growth brand earning an extra 0.6% share, while the Renault-Nissan alliance captures an extremely healthy 20.8% of the EU-16 LCV Fleet share.

The actual Top 10 models remain unchanged from last year though their corresponding ranking does. The biggest gain in ranking goes to the Volkswagen Caddy moving up from 8^th to 6^th place. While the biggest ranking drop came from the Citroen Berlingo falling from 5^th to 7^th. Mercedes Sprinter retains its #1 position as the True Fleet model of choice for the EU-16 but is being chased hard by both the Ford Transit Custom and VW Transporter in 2^nd and 3^rd respectively. The next nearest model is the Renault Kangoo in 4^th but this is over 5000 registrations behind a podium finish and has its own chasers in the Renault Trafic (5^th) and VW Caddy (6^th). The remaining three are the Peugeot Partner, Renault Master and Fiat Ducato.

With Long Term Rental (LTR) allowing for a more flexible approach for companies and their fleets we are seeing an upward trend in this form of mobility. Since 2015, the True Fleet Long Term Rental LCV’s have seen a steady upward trend in both France and especially Italy.

Across the EU-16 countries’ diesels share has shown all possible outcomes, with positive, negative and stable annual figures looking back as far as 2013. While both negative and stable share countries all carry a taxation involving CO_2, the growth countries (apart from Austria) have no such taxation in place allowing for OEM’s to perhaps shift some capacity lost elsewhere.

The LCV market has grown for most of the EU-16 and looks to be in another positive position. As expected we are now starting to see the trend towards lower CO₂ emission vehicles not only to avoid higher taxation but to perhaps future-proof against the restrictions currently being discussed and implemented by some major cities.

The OEMs themselves are already producing lower emission engines but the taxation and legislation from several European countries is starting to build in speed and momentum. Many have committed to bring down harmful emissions and/or clean up the air quality and this will likely impact on the LCV market place sooner rather than later. In addition to this trend the current passenger cars swing toward cleaner vehicle emissions could also influence the LCV market place.

Currently the available selection of engines are heavily weighted toward diesel, which given the fuel efficiency and in some countries the ability for it to be deducted from the VAT makes it perhaps unsurprising, however with the current consumer sentiment, legislative & government policy changes, for just how long will this be sustained?

The question that is now perhaps entering the market is whether the legislation and possible consumer need/trend for low emission vehicles will outpace any change from OEMs in the LCV marketplace?  If so, will this then lead to fleets being penalised on where they can go or on what day they can actually work.

Current OEM announcements of Mild Hybrid Engines for high CO₂ producing cars and SUVs would possibly lend itself to the LCV market place alongside the inevitable flow over from the EV evolution currently taking place and we have seen minor upswing in the alternative fuel market place. However, without a concerted effort from the manufacturers to implement PHEVs, Regular Hybrids or EV LCVs engines, or further expanding petrol options to their model line-ups (that meet the restrictions), the fleet operators may find themselves in a tough situation.

The danger is that LCV fleet operators may be hit hard financially on a tax level or possibly in lost revenue/contracts from restrictions and their ability to complete travel to select destinations. Fleet operators will likely start to actively look to update their fleets in preparation of the continued implementation of bans in new cities or the further tightening of restrictions from cities where restrictions are already in place.

Currently the ever expanding market in online shopping is just one of the many businesses that require this LCV market to bring its products to the consumer.  We see some company fleets already pushing for a change. Harrods, perhaps one of the most famous stores in the world, recently added a Nissan e-NV200 to its fleet and actually started a return to its roots (petrol engine vehicles replaced there all electric fleet in the 60s). There has been an autonomous pilot project in London which just completed its first phase and is using a vehicle called the Cargo Pod to deliver groceries to 100+ homes and even Deutsche Post is scaling up production of the their “Street Scooter” EV delivery vehicle from 10,000 to 20,000 per year by the end of 2017.

So within the current situation there lies the opportunity. Should OEMs who are perhaps already sufficiently geared in the drivetrain technology begin to produce LCVs capable of long distance (for EVs) or bring in more Hybrid technology to this large European LCV market place we can see some significant changes. Firstly to the traditional players who adapt quickest but secondly we foresee ample opportunity for a non-traditional player to enter the market and perhaps capture large share in a relatively short space of time.

Authored by Richard Worrow, Dataforce

Image: Harrods