ABeam predicts a long-term recovery & growth in commercial vehicle sales due to three main macro-economic drivers: 1. Thailand maintaining a competitive agriculture & industry sector; 2. Infrastructure development increasing trade volume; 3. Increase in e-commerce trading. The need for digital technologies needs to be addressed regarding cost for fleet owners and improve their efficiency.
Mr. Ichiro Hara, Managing Director of ABeam Consulting (Thailand) Ltd., a global consulting company headquartered in Japan that specializes in digital transformation, disclosed insights into the future of Thailand’s commercial vehicle market, which represent a significant part of the kingdom’s automotive industry. Historically, 1-ton pick-up trucks have shown a growth rate of 4.40% on average from 2015-2019, while all other commercial vehicles sales have grown by only 2.51%, on average from 2015-2019. However, due to the COVID-19 pandemic 1-ton pickup truck sales in 2020 dropped dramatically by 17% compared to 2019, while other commercial vehicle sales only dropped by 8% during the same period. These figures show that the non-pickup truck market is more resilient compared to other segments, despite the pandemic.
A continuous recovery for the commercial vehicles market over the next few years is expected thanks to the three following factors. Firstly, Thailand is expected to maintain its agricultural and industrial competitiveness, resulting in stable to growing commercial vehicle usage. ABeam’s estimates, 49% of all commercial vehicles weighted above 2.5 tons are used in the agricultural sector, while 42% are used in the industrial sector. One of ABeam’s studies shows the expected growth thanks to increased yield brought forth by R&D in seeds and more competitiveness through technologies such as, precision farming applications. Moreover, the industrial sector will benefit from an increase in regionalization of supply chains (due to the pandemic); to diversify risk and to better serve market needs, reducing the global supply chain to shorter supplier chains.
Secondly, an increase in trade from improved infrastructure as Thailand is poised to become a major logistics hub in the region. An example is the “Thai-Chinese Railway Project” which has the ambition of connecting Thailand with China’s One-Belt-One-Road (OBOR) network of 64 nations. ABeam expects that projects like these and other infrastructure development will increase the growth of the commercial vehicle market from 2025 to 2030 and beyond, due to the need of construction trucks and greater volumes of trade through easier connectivity with China and the region.
Thirdly, the demand for e-commerce services that are unlikely to decrease, even after the pandemic. The e-commerce sector relies heavily on commercial vehicles, such as pick-up trucks, for operating last-mile deliveries, and large freight trucks for transporting goods inland from ports. An example is Kerry Express, which has a fleet of 420 six-wheelers and 7,334 4-wheel trucks in Thailand. A survey conducted by the United Nations last year, covering nine developing and developed countries, indicated that more than half of the respondents would likely continue their current online shopping habits, even after the pandemic ends.
Overall, with the commercial vehicle market set to recover in the long-term, fleet owners will need to think of strategies of how to incorporate digital technologies into their business to exploit that growth and remain competitive. In Thailand, ABeam sees that advanced telematic services could be one of the best digital solutions available for optimizing growing and aging fleets. Heavy trucks (10 wheels and above) are required by law to install telematic devices (GPS tracking); the basic functions to meet the Department of Land Transport of Thailand’s requirements are only speed recording, location recording and the driver’s information. However, with telematic devices already installed in most fleets (90.31% of the truck said DLT), companies can further utilize and upgrade this infrastructure to achieve a connected smart fleet for their operations.
In Thailand around 32.88% of registered commercial vehicles (including pick-ups used for transportation) have gone through more than 20 years of service. At this rate ABeam estimates that by 2030, the numbers of commercial vehicles weighted above 2.5 tons aged 20 years or more will be up to 506 thousand units (or 38.56%) and upkeep of those fleets is expected to have an increasing impact on profitability for fleet owners. Only flexible, low-cost, and efficiently utilized fleets can stay competitive, which can be achieved by smart fleet management and preventative maintenance leveraging advanced telematic solutions, improving existing fleet efficiency, vehicle up-time and vehicle service lifetime.
About ABeam Consulting (Thailand) Ltd.
ABeam Consulting (Thailand) Ltd. is a subsidiary of ABeam Consulting Ltd. –headquartered in Tokyo having 6,600 people serve more than 1,100 clients throughout Asia, the Americas and Europe providing consulting services in Thailand since 2005, ABeam Consulting (Thailand) has more than 400 professionals serving more than 200 clients in Thailand with expertise in digital transformation services that create strategic advantage, improve business processes, leverage technology innovation and enhance organizational performance.
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