Disruptive Forces Redefining Commercial Vehicles – A Look Into the HDMO Market’s Future

Heavy duty motor oil (HDMO) demand is projected to grow steadily over the next few years as the commercial vehicle market continues to expand. Factors such as technological development accelerated by (or associated with) the online retail boom as well as the implementation of strict air-quality regulations is promoting the use of electric vehicles (EVs) in the commercial vehicle (CV) segment. Large metropolitan areas around the world are in­creasingly incorporating EVs into their bus fleets. However, unlike in the passenger vehicle segment, Kline foresees more modest penetration of EVs in the CV population for a variety of reasons.

The level of penetration of EVs will strongly depend on the pace of technological advancement and the successful implementation of governmental policies. In the mid-term horizon, a modest penetration of EVs is expected in the CV population due to technological barriers, notably battery capacity limitations, along with underdeveloped charging infrastructure.

Conversely,  improved operational efficiency and safety, in addition to compliance to emission standards, are factors driving EV penetration in the commercial vehicle segment. At the early stages, it is believed that  the penetration of EV will also be primarily an application-driven process; for example, LDCVs and MDCVs used for urban haul delivery will be the early adopters of EVs. The EV penetration will also vary by CV fleets and will display a higher degree of technological diversification, as EVs and other alternative drive systems continue to make significant inroads.

There are other promissory alter­native drive systems in the CVs sector, such as compressed natural gas, liquified petroleum gas, hybrid gas/EVs, and flexi-fuel vehicles.

As the industry confronts fundamental changes in tech­nology, companies will take different approaches until a “winning” technical solution emerges. In this regard, OEMs have already introduced and commercialized mixed technology fleets rather than take a one-size-fits-all approach to CVs.

However, the gradual penetration of EVs and other alternative drive systems constitutes only one of several disrupting forces with potential to substantially redefine the CV market.

Digitalization and telematics integrated to Industry 4.0 are innovative tools adopted to improve fleet management operations and the increasingly integrated supply chain. The emergence of novel urban logistics concepts, such as “last mile delivery,” is addressing the need for more efficient deliveries in a context of rapid urbanization and an expansion of e-commerce. Fleet consolidation, a process where larger fleets are gradually absorbing medium and small fleets to stay competitive under a fiercely competitive market environment, is among many other factors to watch.

OEM genuine oil use in this market is still relatively minor. In the U.S., it accounts for around 8% market share. While some off-highway OEMs such as John Deere have had a genuine oil for quite some time, others have only recently begun to introduce their own genuine oils or have begun promoting genuine oil use.

Watch out for our next blog, which will be looking into growth, trends, and opportunities in the OEM genuine oil heavy-duty market.

The HDMO Market in 2040: A Long-Term Outlook analyses the impact of all aforementioned disrupting forces on HDMO demand. This report will also provide actionable insights to assist participants in the lubricants market in identifying opportunities and challenges within the evolving HDMO industry.

OEM Genuine Oil Brands and Programs in the HDMO assesses the growth and market penetration of OEM genuine oil brands in the global market for HDMO.

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