Europe is set to emerge as a strong regional market for medium- to heavy-duty natural gas (NG) commercial vehicles, populated by several competitors on both OEM and supplier sides.
Driven by energy price volatility, tightening emission norms, and the shale gas revolution in the US, the market for NG vehicles is gaining considerable momentum. Of all alternative NG technologies, compressed natural gas (CNG) and biomethane technologies pose the least pressure on existing infrastructure. By 2018, the NG market in Europe is expected to reach production levels of nearly 18,000 units.
New analysis from Frost & Sullivan (automotive.frost.com), Strategic Analysis of the Medium- to Heavy-duty Natural Gas Commercial Vehicle Market in Europe, finds that NG truck and bus penetration will reach an estimated 3.4 per cent and 12.7 per cent, respectively by 2018.
Spark ignited technology will account for around 90 per cent of commercially manufactured NG buses, while compressed ignition technology will dominate the liquefied natural gas (LNG) truck market with around 60 per cent share. The heavy duty segment is set to account for 75 per cent of NG truck sales with LNG being a dominant fuel option.
"OEMs need to develop market and application focused technologies that complement current state of natural gas infrastructure with forward compatibility with upcoming CNG/LNG infrastructure. Focus should also be on supply chains that enable reduction of upfront cost associated with these vehicles, which are currently perceived by many potential customers as being prohibitive," noted Frost & Sullivan Automotive & Transportation Consulting Analyst Saideep Sudhakar. "However, OEMs and suppliers are working both independently and synergistically, through a combination of vertical and virtual integration, to add growth momentum to this steady, evolving market segment."
OEMs' willingness to differentiate products through technology partnerships is leading toward increasing focus on compression ignition and dual fuel technologies. Compression ignition would facilitate the use of NG vehicles for long haul application, which would compensate for the higher upfront cost provided the fuel infrastructure and diesel NG price differential exists.
In future, the margins for module suppliers will shrink, and the same will happen for component suppliers when OEMs begin exerting pricing pressures as volumes start to grow. Duty cycle restriction of NG vehicles can be overcome through concerted strategies aimed at developing vehicles and products that deliver highest efficiencies in certain targeted vocations and duty cycles along with necessary fuel infrastructure.
"OEMs need to develop duty cycle focused product platforms and collaborate with fuel suppliers and governments to create a favourable environment for the adoption of NG vehicles by fleet owners," advised Sudhakar. "Suppliers need to focus on vertical integration to ensure sustainable growth and development of the market".
If you are interested in more information on Frost & Sullivan's study Strategic Analysis of the Medium- to Heavy-duty Natural Gas Commercial Vehicle Market in Europe (M8D2), please send an email to Katja Feick, Corporate Communications, at katja.feick[.]frost.com, with your full contact details.
This study is part of the Automotive & Transportation Growth Partnership Service programme. Frost & Sullivan's related research services include: 2013 Outlook of the Global Automotive Industry, and Medium-Heavy Duty Hybrid/Electric Truck and Bus Market in North America and South America as well as China and India. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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