Bain Study: Diesel in Trucks is an Expiring Model

The first diesel trucks appeared at the IAA in 1924. By 2024, they could gradually disappear from the roads in Europe, making way for trucks with alternative drives. The study "European Truck Market Outlook 2022" by the international consulting firm Bain & Company suggests this development. The authors surveyed 565 fleet managers in Germany, France, the United Kingdom, and Spain. About 60 percent responded that they would buy trucks running on electricity or hydrogen, or at least hybrids, in three years. According to the study, the ambitions go even further. They could even exceed the manufacturers' capacities. By 2025, nearly half of the respondents' fleets are expected to consist of trucks with alternative drives. Bain & Company reports that this creates significant pressure for truck producers to act. They will have to adjust several levers at once to successfully manage the transition.

Comfortable Starting Position

"The industry is facing its biggest upheaval in 100 years," emphasizes Dr. Eric Zayer, Bain partner and co-author of the study.

"Nevertheless, the starting position of European truck manufacturers is comfortable."

According to Zayer, measurable customer loyalty has significantly increased compared to a similar study from 2018.

"Truck producers are now reaping the fruits of their intensive efforts to reduce the total cost of ownership of their vehicles, increase their reliability, and align sales even more closely with customer needs."

However, manufacturers cannot rest on their laurels. Alternative propulsion systems are increasingly coming into focus for fleet owners and operators. Only 30 percent of respondents are considering purchasing a truck with a conventional diesel engine in three years. In Germany, it is 28 percent—down from 50 percent in 2018. Dr. Jörg Gnamm, also a Bain partner and co-author of the study, views diesel as a phase-out model since its CO2 emissions burden the environmental balance of customers.

“This also ends the pilot phase for new drive concepts for truck manufacturers.”

Those who do not soon offer a comprehensive range of electric and hydrogen vehicles should brace themselves to lose market share, warns Gnamm.

Range Has to Match

The changed demand also presents new challenges for truck manufacturers in the sales process. The total cost of ownership of a truck is still the most critical decision criterion for customers, followed by reliability and service. However, the picture is changing in the promising market for alternative drives. Here, fleet managers are primarily interested in the range of the vehicle, with performance, efficiency, and reliability following behind. However, many of those surveyed for the study still have doubts about whether freight can be transported on time using an electric drive alone. Therefore, as of today, they would prefer to opt for a hybrid vehicle. Nevertheless, market expert Gnamm sees this as merely an interim step:

“In the long run, electric and hydrogen vehicles will prevail.”

Many fleet managers are still reluctant to invest due to acquisition costs. Manufacturers could address these concerns with subscription models or pay-per-use concepts. With such offers, 42 percent of respondents would find it easier to opt for a truck with an alternative drive. A study from 2018 already showed that vehicle ownership is losing importance among truck customers.

Intelligent marketing – a must

Given the changing customer preferences, truck manufacturers are under pressure. They need to expand their range of models with new drives and at the same time fundamentally overhaul their business models. Bain has identified five levers that are crucial for a successful transformation:

• Rapid expansion of alternative drives. According to respondents, fleet conversion could take place as early as the first half of this decade – and thus sooner than expected. The sooner alternative drives are mass-produced, the better the chances for truck manufacturers to assert themselves in the competition. In parallel, truck producers should communicate intensively with their customers, address existing concerns, and dispel them by providing comprehensive information on the range and reliability of the new types of drives. Pioneers will also secure early access to a functioning charging infrastructure.
• Increased focus on reliability. Whether diesel or electric trucks, purchase or subscription: Vehicle reliability remains a crucial factor for customers. Those who also excel in service will be rewarded with sustained loyalty. In Germany, 43 percent of respondents in the study wanted to reduce their in-house service due to the increasing technical complexity of trucks.
• Expansion of omnichannel. Customers now expect a cross-channel offerings process, from initial contact to service appointment scheduling. The more efficient this process is, the more manufacturers can optimize and simultaneously streamline their sales.
• Development of new ownership concepts. To make it easier for fleet management to switch to alternative drives, truck manufacturers should increasingly offer subscription models, pay-per-use concepts, and rent-to-own options. The experimental phase is over here too.
• Professional aftersales management. Quick, reliable aftersales services ensure high customer satisfaction and provide incentives for repeat purchases. Thus, 59 percent of German fleet managers would be interested in contracts that cover all services, such as maintenance or replacement of wear parts, for a fixed monthly price.