Hybrid Truck Market Analysis – GBI Research’s new report “Hybrid Truck Market Analysis to 2020 – Favorable Regulations and Fleet Purchases to Buoy the North American Market” now provided and available at ReportsandReports

Dallas, TX, July 5, 2010: GBI Research’s new report “Hybrid Truck Market Analysis to 2020 – Favorable Regulations and Fleet Purchases to Buoy the North American Market” provides an in-depth analysis on the development hybrid truck market in the North America. This report examines the current and forecast market for hybrid trucks, including Medium- and Heavy-duty trucks. It provides detailed coverage of the market drivers along with in-depth analysis of the latest technology. It also examines Hydraulic based hybrids, Electric hybrids and advanced battery technology. Furthermore it details the latest OEM Technologies, OEM Market Share and strategies by manufacturer. The success of hybrid technology in light-weight passenger cars has set stage for penetration of hybrid propulsion technologies into commercial truck market. The volatility of fuel prices, stringency of emission standards and government incentives to adopt green technologies are pushing the hybrid truck market. All the major truck manufacturers and hybrid system developers in the North America are on board with the technology. Some forward-thinking organizations — FedEx Express, UPS and Coca Cola — have adopted hybrid trucks into their fleets; other are certain to follow suit.

North American Truck Industry is recovering from the deepest recession in recent years; Improving Orders across OEMs indicate growth of 5-10% though 2012 across all segments

Well before the global economic crisis crippled the world, the North American commercial trucking industry was striving to find a way out of dwindling margins and plummeting sales volumes. The medium and heavy truck market started feeling this downturn as early as 2007. The trucking industry, viewed as a linchpin to economic growth, was further deteriorated by the economic turmoil in 2008. The trend percolated in 2009 sales figures as well.

A confluence of factors from outside the commercial truck market impacted the industry. The huge changes to the financial market tightened the financing for new trucks, while the housing market downtrend and unpredictable oil prices, pushed consumers away from buying new vehicles.  The economic downturn made a huge dent on sales volume of the trucking industry as the sale declined sharply from past levels.

In anticipation of the US Environmental Protection Agency 2007 emissions mandate, which took effect in the US and Canada at the beginning of 2007, the truck makers had big pre-buy in 2006 — resulting in exceptionally good sales figures for that year. But due to cyclical decline in the truck market sales were weak, and the situation aggravated with the weakening housing market at the end of 2006. With the falling freight market volumes, the sales of new heavy trucks also dropped significantly. Furthermore, the global financial crisis hit during the fourth quarter of 2008, and the subsequent economic slowdown led to further market contraction.

Sales of Class 8 trucks have been the hardest hit. The sales of the Class 8 trucks segment, which includes single-unit and tractor-trailer equipment typically used for long-haul freight transportation, decreased by 48.3% in 2007 from their 2006 levels due to the introduction of more stringent emissions standards. Class 8 trucks equipped with more advanced diesel emission-control technologies raised the vehicle price in 2007. The Class 8 trucks market could not recover in 2008 due to the worsening economic climate and further declined by 33.6% in 2009 from their 2007 levels. The trucking industry is experiencing its deepest recession in recent years and business is not expected to pick up soon. However, the forecast for commercial truck sales until 2012 indicates that all market segments are expected to grow between 5% and 10% in 2010.

Mounting Environmental Concerns and the need to reduce the Dependence on Foreign Oil will continue to drive the Growth of the Hybrid Truck Market

About two-third of the world’s oil reserves are controlled by the Organization of the Petroleum Exporting Countries (OPEC) member countries and most of the reserves are in the Middle-East.  And the world’s oil demand is reliant on social or politically unstable regions for its oil supply: the Middle East, Venezuela, and Africa. Thus the supply is vulnerable to disruption. Oil has a significant influence on international trade, economics and politics. Relying on foreign oil could have serious implications for a country’s security and economic growth.  Therefore, the US and Canadian governments have adopted a wide range of policies to reduce oil dependency and attain energy security. This includes massive modernization of road transport fleet. Policy analysts have zeroed in on the importance hybridization of vehicle

The US imports around 57% of its oil and it fears that this dependence will increase as it uses up its domestic resources.  Oil price shocks and price manipulation by OPEC have cost the US economy dearly — about $1.9 trillion from 2004 to 2008 — and each major shock was followed by a recession.  In 1989, the transportation sector petroleum consumption surpassed US petroleum production for the first time, creating a gap that must be met with imports of petroleum. By the year 2030, transportation petroleum consumption is expected to grow to 18 million barrels per day; at that time, the gap between US production and transportation consumption will be 7.5 million barrels per day.

Global climate change is the greatest environmental threat facing the world. World energy demand grew at a staggering rate of more than 100% during the period 1970-2008, reaching over 12,000 Mtoe (million tons of oil equivalent).This increase in energy demand resulted in a dramatic increase in carbon dioxide (COB2) emissions triggering global environment change. Worldwide initiatives such as the 1997 Kyoto Protocol require Organisation for Economic Co-operation and Development (OECD) member states to cut their COB2B emissions by an average of 5.2% by 2012. Massive adoptions of fuel efficient and low-emission vehicles will help decrease GHGs emissions helping high-carbon economies to attain these targets.

The increased use of ‘Green’ technology in trucking sector could play a significant role in reducing GHGs and preventing further damage to the atmosphere. The growing number of environment-conscious fleet owners is becoming a force in the attempt to limit greenhouse gas emissions.

High Prices — a   Barrier for Hybrid Trucks

The high price of hybrid trucks is the key restraint impeding the take-off of hybrid sales. The up-front cost raises the affordability barrier. Fleet operators place high weight-age on upfront costs rather than on life time costs of owning a truck. Hybrid trucks typically cost between $23,000 and $45,000 more than traditional trucks. The production volume has not yet reached a level sufficient to realize cost reduction. Truck makers confront a Catch-22 situation: without higher sales volume of these trucks, the high sticker price of hybrid trucks will not descend, but their current prices keeps the sales low and commercial fleets will to place large orders only when the prices slide down.  The ‘Economy of scale’ model postulates that each supplier needs 3,000–5,000 per year to reduce their price premium, yet recover their production cost. Manufacturers and OEMs are counting on governments to step in and help stimulate demand through tax breaks and subsidies. These incentives are expected to generate higher sales volumes in the short term so that the hybrid truck industry stays afloat, until the industry gets higher volumes to reduce costs and fuel prices again rise significantly.

GBI Research believes that the cost structure for hybrids will be relatively high during the first phase of hybrid adoption. Currently, the truck industry in North America is still recovering from deepest recession in recent years — cash-strapped truck industry do not have the option of adjusting vehicle price downward in anticipation of future sales. Government subsidies will help drive the initial sales in the short term so that the hybrid truck industry stays afloat, until the hybrid truck industry gains a strong foothold.

Trucking Industry Sector is on the Brink of experiencing a major transition to Hybrid Technology

The US market is well positioned to ride the hybrid wave. More than 25 US based truck markets and 14 hybrid system developers have aggressively forayed into hybrid development. Many truck makers are ready to test their prototypes while hybrid models from some companies’ have reached their assembly lines. These assembly lines are producing hybrids for applications such as package delivery vehicles, beverage haulers, and utility boom trucks. More than 95 U.S. commercial and utility truck fleets have so far purchased or are testing these hybrids. FedEx Express came to the fore and ordered the first hybrid trucks in the US, while United Parcel Service that has a large fleet of alternative fuel vehicles also booked hybrid trucks. Other large fleets adopting hybrids include Coca Cola, Wal-Mart, Verizon.

Though the hybrid truck industry hasn’t seen the similar revolution as the hybrid passenger vehicle, the hybrid truck market is finally showing the first signs of take-off.  Currently, there are over 1200 hybrid trucks on the roads in the US and Canada, up from just 200 trucks in 2006. GBI Research anticipates the medium and heavy-duty hybrid market to reach an estimated 98, 702 units by 2020. The North American fleets have so expressed interest in replacing a major segment of their conventional trucks with hybrid models that the growth of medium and heavy-duty hybrid truck market may go well beyond what is expected.

A confluence of factors highlights the large market potential for medium- and heavy- duty hybrid trucks: tightening emission standards, the risk of an uncontrollable rise in oil-prices in the near or long term and increasing climate concerns. Hybrid truck technology offers significant opportunities to address each of these issues.

The North American Class 8 hybrid truck is expected to robust growth post 2010. The demand growth is anticipated from increase in freight market due to recovering economy. A large cross-section of heavy-duty fleet managers believe that in the foreseeable future the cost of compliance for conventional heavy-duty truck will increase significantly. This factor will further boost the demand for hybridized cousins of conventional heavy-duty trucks.  While the market penetration of Class 8 hybrids will lag behind medium duty trucks, GBI Research estimates that the production of Class 8 will reach about 7,908 units by 2015 and 27,429 units by 2020.

Corporate Fleets are at the fore front in providing a positive example of ecological responsibility and sustainable practices.

North American corporate fleets, striving to reduce CO2 emissions and pollution, are expected to be among the steadiest buyers of medium and heavy hybrid trucks. In the US, commercial trucks account for about 12% of the miles driven but produce about 25% of all emissions. Therefore, the sector is likely to drive the demand for hybridized vehicles that offer emission reductions and fuel efficiency. Large and small corporations and government agencies are testing hybrid trucks and a few have successfully integrated these vehicles into their existing fleets. FedEx, United Parcel Service Inc and Coca-Cola Enterprises have boosted their fleets with hybrid electric vehicles.

FedEx operates one of the largest commercial hybrid electric trucks in North America and the transportation industry with about 317 vehicles and the number is expected to increase to 389 by the end of 2010. UPS, the package delivery giant, was the first package delivery company to introduce a HEV into daily operations with a research program it launched in early 1998. In 2001, the company deployed the industry’s first hybrid electric package car into regular service. UPS then introduced its second generation HEV fleet in 2004. While continuing to develop its alternative fuel fleet – UPS has invested more than $15m in the effort – the company has also purchased and is operating more than 19,000 low emission conventional vehicles. These vehicles have regular gas- and diesel-powered engines but employ the very latest technology and manufacturing techniques to reduce emissions as much as possible. UPS continues to invest in alternative fuel technologies and operational efficiencies to reduce its carbon footprint. The company believes that there is no silver bullet technology to reduce its dependence on fossil fuels; however hybrid technology seems to be most promising technology. Coca Cola Enterprise owns the largest fleet of hybrid heavy-duty vehicles in North America with a total of 328 trucks on the road. It formed an initial fleet of hybrid heavy-duty vehicles in 2001 after extensively testing the hybridized trucks. Its investment in hybrid technology is aimed at achieving energy efficiency and sustainable practices across the corporate and industrial value chain.

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