What are the key drivers of this commoditization? First is the significant increases in truck prices due to the added cost of regulatory compliance. In the US, 2010 regulations are pushing up truck prices in the neighborhood 10-20%. Similar cost increases were seen in EuroV and then would be expected with subsequent regulation. The escalating price of the vehicle is making a further differentiation (premium) on brand very difficult for most buyers.
Secondly, the growing role of ever more consolidated fleets. Many of the smaller or small-to-medium sized fleets are being consolidated and that will continue into the future. As this develops, there will likely be two kinds of fleets; very small ones who can be highly flexible to varying needs and very large ones who can achieve the economies of scale. The small fleets will not be able to afford to differentiate on brand and large ones are buying their vehicles as a B2B decision, not based on brand.
We know at IBM, when we have a differentiated solution that nobody else can touch, we do great. When we're in the procurement office, responding to an RFP, then we'll end up competing on price and everything invested in our brand, won't mean a thing.
Finally, we interviewed 9 fleets formally and another 3 informally (large and small). They overwhelmingly told us that they don't care about brand of the vehicle when buying. Look at the brand related metrics in the breakouts on the embedded screencast. This was the responses from our interviews from the industry itself,... US, Europe, suppliers, developed market OEMs and fleets all told us it would be less important in the future.
Our response is that Brand will remain important to the degree that truck makers transition it around an integrated solution made up of four components. Of course Advanced Vehicles will keep developing, but these must be coupled with Comprehensive Serviceability that goes far beyond today’s service contracts. Vehicles will also have to have Integrated Telematics that support every aspect of how they are used. Finally, solutions must also include other complementary, bundled services…
... We'll add some specific examples in the next post
#truck2020
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