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Customer LoginsPick-up for pick-ups? New models to crowd into European market
The European one-tonne pick-up market is going to benefit from a deluge of new models over the next couple of years. The question will be whether the market growth will be enough to accommodate all these entrants.
IHS Markit Perspective
- Significance: A range of one-tonne pick-ups are to be launched in to the European markets by new players during the next 12 months or so, which will join updates by existing OEMs.
- Implications: The category is relatively niche in Europe compared to other parts of the world.
- Outlook: While this situation is unlikely to change, they could present new options for some customers.
The market for one-tonne pick-up trucks in Europe will see an increase in new entrants in the coming years as automakers bolster their light commercial vehicle (LCV) fleets with such models. The category - known as the C PUP in IHS Automotive nomenclature - has been dominated by Japanese automakers in the European Union (EU) and European Free Trade Agreement (EFTA) market in the past. Models such as the Nissan Navara, Toyota Hilux and Mitsubishi L200 have been mainstays, and have been key to the category reaching its peak of 166,000 units during 2007 from 93,500 units during 2003, supported by the Mazda BT-50, Isuzu D-Max and Ford Ranger.
The growth rate during this period was driven by a combination of factors. This included strong consumer confidence, easy credit and a construction boom in parts of the region. Of particular note in this peak year were Italy, Spain and Greece. However, the UK market was by far the largest with registrations, amounting to almost 39,000 units during 2006 and 2007. This market recorded a surge from around 12,400 units during 2001. Demand was supported in this market by the tax breaks for use of this type of vehicle as a company car during this point. Not only was VAT able to be claimed back by registered businesses as it constitutes a commercial vehicle, but there was also a flat rate on the benefit-in-kind (BiK) rate of GBP500 instead of multiplier dependent on carbon dioxide (CO2) emissions that hit passenger cars. This was raised to GBP3,000 during March 2007, but still constituted a saving for some.
However, with the onset of the global economic crisis in 2008 and 2009, demand for such vehicles - as it did for the LCV market as a whole - slumped. Registrations fell by around from 2007 levels by 2009, and were slow to recover. Although registrations reached 105,000 during 2011, the Eurozone crisis that hit over the following two years led to registrations falling to between 90,000 and 95,000 units.
Nevertheless, improvements are showing signs of gaining pace. In 2015, registrations hit 118,400 units. A key contributor to this has been the UK, where registrations have surpassed earlier peaks as they hit 40,000 units, as it became carried away on the general buoyancy of this market of late in the light vehicle category. The scale of the French market and growth in Germany have also contributed.
Over the next few years, the range of models in this category is going to expand significantly. There was already the key addition of the Volkswagen (VW) Amarok during 2010, which has benefited from a heavy update during 2016 including revised interior and exterior as well as new engines with the aim of making it a premium offering. It will also be joined by other automakers entering the category, many for the first time. This will include Fiat which has brought to market the Fiat Fullback, while Renault has also introduced the Alaskan. Mercedes also plans its own 1-tonne pick-up.
Nevertheless, while Groupe PSA has also unveiled plans to introduce a new Peugeot pick-up as part of its LCV strategy, IHS Markit anticipates that this will be sold predominantly outside of Europe.
Outlook and implications
With this influx of new and updated entrants - which will include the latest generation Toyota Hilux and Nissan NP300 Navara - one of the questions that will be asked is whether there will be enough breathing space in the European market for all these OEMs to benefit from these launches. IHS Markit currently anticipates that the market for such vehicles will increase by over 12.5% y/y to around 133,500 units during 2016 as part of our latest forecast. We also expect registrations in the C PUP market to peak at over 144,500 units in 2019. We forecast that much of this increase will be taken up by the introduction of these new models, and also putting some downward pressure on the incumbents. Even so, the leaders of this category are not expected to be moved significantly, with Toyota's Hilux, Nissan's Navara and Ford's Ranger remaining the market leaders.
Nevertheless, while OEMs will be looking to gain a positive return from launching these vehicles, Carlos Da Silva, manager of IHS Markit's Automotive European light-vehicle sales forecast, has said that this is something of an "opportunistic move." Indeed, all of these new entries come as part of OEM supply deals between automakers. Fiat's Fullback, for example, uses the Mitsubishi L200 as the basis for this model, while both the Renault Alaska and Mercedes' 1-tonne model will be based upon Nissan's Navara. This allows them to broaden their range at a fraction of the cost than if they were undertaking this independently.
Furthermore, many of these launches are part of a wider strategic move in the LCV category. Included among this will be a push in to other regions globally where such vehicles are popular. This will include South America, but Fiat's launch of the Fullback has mentioned a focus on Middle East and North Africa.
However, Da Silva says that while we expect C PUP vehicles to keep on doing what they have been doing so far in Europe in meeting specific niche requirements, the optimism that we have factored in to our forecast is relates to the fact that many of these newcomers are local brands which have a strong presence in the market place and will be able to lean on a large brand recognition.
Nevertheless, it is not to say that there might not be further growth. Indeed, Da Silva points out that these vehicles could gain further traction if they can further leverage the combination of their load capabilities alongside the ability to transport people in crew cab configuration in the market place. However, for now a large part of this role can be achieved with the stalwart car derived van (CDV). It also does not help that pick-ups have also been traditionally seen as too big, too costly, and using large powertrains to gain a large foothold. Certainly on the evidence of the VW Amarok, these other new European entries are unlikely to be able to overcome this perception enough to grow the market significantly for now
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.