Market and influencing factors
Industrial trucks are deployed for a wide variety of applications. Material handling products are used for tasks such as loading and unloading, linking production steps and moving pallets in logistics centres or in retail/wholesale operations. They therefore form part of the production processes and supply chains of many different industries around the world.
Measured in terms of unit sales of new trucks, the growth of the market for industrial trucks has exceeded global economic growth over the past ten years (2005–2015), rising at an average of 3.9 per cent per year. However, it should be noted that these statistics do not include price effects or the contribution from the service business. Nevertheless, the industry is subject to cylical fluctuations. Economic conditions in the different regions and the rates of growth in global trade are therefore key influencing factors for the KION Group, whose financial situation is also affected by competition levels, exchange rates and changes in commodity prices.
The main growth driver across all regions is the advancing interconnectivity of the global economy, which requires additional transport services between what are becoming increasingly fragmented value chains and supply chains. In addition, the increasing specialisation of companies is making logistics processes more segmented and more complex. The growth of e-commerce is also having an ever greater impact. Independent market analyses indicate that in western Europe alone revenue generated by e-commerce companies will double in the next five years. This will bring a need for new warehouse and logistics capacity and thereby raise demand for industrial trucks and automation solutions.
Measured in terms of units ordered, 39.7 per cent of the global market was attributable to diesel trucks in 2015, while electric forklift trucks accounted for 17.5 per cent and warehouse trucks for 42.8 per cent. Due to increasingly stringent emissions regulations and the continued march of e-commerce, the KION Group expects the segmentation of the market to shift towards electric forklift trucks and warehouse trucks, partly because these are suitable for use in buildings. This trend benefits the KION Group with its particularly strong position in these two product categories. In the developed economies, electric forklift trucks and warehouse trucks already account for the bulk of the market volume, whereas in growth regions simple counterbalance trucks with an internal combustion engine (diesel trucks) still make up a comparatively high proportion of the total volume.
In regional terms, emerging markets such as China, eastern Europe, Central America and South America are – despite a temporary slump in 2015 – the major sources of market growth. Demand for logistics services on the back of increasing consumer spending is being fuelled by expansion of industrial and public infrastructure as well as rising living standards. In mature markets, where supply chains are highly sophisticated, the large number of trucks in use provides a strong base for replacement business. The KION Group estimates that the majority of sales in western Europe are currently accounted for by replacement investments.
In the long term, due to rising customer expectations in terms of quality, efficiency and eco-friendliness of industrial trucks, the middle (volume) price segment is likely to become increasingly important for the growth markets in particular. At the same time, there is mounting competitive pressure as some manufacturers in the economy segment based in emerging markets are pursuing an international expansion strategy. In the premium segment, customers are much more focused than before on optimising total cost of ownership and on the integration of fully automated intralogistics solutions. In 2015, according to the KION Group’s estimates, the premium price segment and the economy price segment each accounted for between 25 and 30 per cent of units ordered. The remainder was attributable to the volume price segment, making it the largest in terms of units sold.
Regulatory frameworks, which include mandatory emissions limits for trucks, have a major impact on the business model. The products and services of companies in the KION Group have to comply with the specific legal requirements in their respective markets. Compliance with the different requirements has to be verified or certified. Many of the legal requirements are enshrined in product-specific standards and other norms (e.g. EN, ISO and DIN).
Legal requirements also apply to the construction and operation of production facilities, including in relation to air pollution avoidance, noise reduction, waste production & disposal and health & safety. Furthermore, the KION Group fulfils all of the legal requirements pertaining to exports and financing business.