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European light commercial vehicle market set for growth says research firm Technavio

Light_Commercial_Vehicle_Market_in_Europe
Infographic showing key drivers behind growth of LCV sales in Europe

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21 October 2017

MARKET research analysts Technavio are forecasting the European light commercial vehicle market to grow at a Compound Annual Growth Rate (CAGR) of close to 4% during 2017-2021.

In its latest report, Technavio highlights tthree market drivers that are contributing to the growth of the LCV market in Europe:

  • Growth in construction industry and e-commerce to drive market demand for LCVs
  • Resurgence of new ridesharing platforms, increasing the van sales
  • LCVs emerge as an important tool for SMEs business processes

Growth in construction industry and e-commerce to drive market demand for LCVs

Identifying rising rates of urbanisation, the report believes this will increase the demand for construction of residential, commercial, and recreational centres. This is expected to drive the demand for additional vehicles to complement transportation of workforce and materials for construction within cities.

Rising urbanisation is causing a shift of retail and distribution centres to within the proximity of urban areas. Online retail sales and E-commerce have been rising due to increased penetration of internet connectivity and smartphones. This will result in an increased purchase of LCVs for facilitating timely delivery of items to buyers, says Technavio.

According to Ganesh Subramaniam, a lead analyst at Technavio for automotive manufacturing research:
“LCVs are poised to replace medium-duty commercial vehicles as LCVs with turbochargers have increased cargo carrying capacity and fuel efficiency. Moreover, LCVs are not affected by emission norms. Hence, these are being increasingly produced by vehicle manufacturers for meeting the transportation and logistics needs of urban and semi-urban areas in Europe.”

Resurgence of new ridesharing platforms will help increase van sales

Though large vans (van-based MPVs) are not a part of the European family set up, they will see an increase in demand due to the emergence of new ridesharing platforms, the report continues.

Such on-demand ridesharing services will help alleviate city traffic congestion and sustainable as it involves spacious and more comfortable vans.

For instance, Mercedes-Benz Vans is set to enter the ridesharing industry in Europe. In September 2016, Daimler got into a joint venture with the US start-up company Via. Via is focused on developing scalable and on-demand ride sharing solutions. Via uses a smart algorithm, which enables a dynamic mass transit system that reduces traffic in urban areas. Together the two companies aim to introduce on-demand shared rides in Europe, which would increase the demand for passenger vans in the European region

Volker Mornhinweg, Head of Mercedes-Benz Vans, has commented on the tie up saying:

“On-demand ride-sharing offers many new ways of making city traffic efficient, needs-based and sustainable – especially when it involves the use of spacious, safe and comfortable vans.

“Via is one of the most successful providers in the growing ride-sharing sector while Mercedes-Benz Vans has the perfect vehicles that are being continuously optimized for this job. By deepening our cooperation with Via, we are thus taking the next logical step in the context of our strategy for the future and are expanding our range of new mobility services.”

Ganesh adds: “The joint venture would bring the concept of On-Demand Shuttle Operating System, which is Via’s proprietary technology to the European market. This will enable vans to be dynamically routed to thousands of virtual bus stops across the city. This innovative public transit system would reduce traffic volumes in the city without the need for expensive infrastructure developments.”

LCVs emerge as an important tool for SMEs

In addition to being the key players in the logistics chain and enabling ‘last mile’ delivery of goods in both urban and rural areas, the report highlights that LCVs are largely used by small and medium enterprises (SMEs) as a business tool.

These LCVs can serve different purposes and can be tailor-made to serve various requirements. These include:

  • cold storage,
  • ambulances,
  • freight forwarding, and
  • passenger transport.

This versatility ensures that other transport services cannot easily replace LCVs. For example, Mercedes Sprinter platform provides transport solutions in five different vehicle categories, from a panel van to various solutions for passenger transport, ranging from 6-seater to 22-seater.

For SMEs, the LCV is an essential tool to enable them to participate in business. However, Technavio says that the transport efficiency and total cost of ownership will be decisive purchasing factors for customers.

For more – go to Light Commercial Vehicle Market in Europe 2017-2021

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