Major overhaul of European LCV sector expected this year

Article by Anita Panait, on February 7, 2013

The light commercial vehicle sector in Europe is expected to undergo a major transformation this year. Asian carmakers like Toyota and Hyundai are planning to take the European LCV market more seriously while long-time partners in the sector are mulling new alliances. The shake-up could mean a lot to players in the European LCV market – which includes car-derived vans, panel vans and pickups with a total gross weight of less than 3.5 metric tons -- since the sector has proven to be a source of good money and several carmakers consider it as their financial savior.

It is estimated that the profit margin on a van reaches 9 percent, which is almost the same on a premium vehicle. Max Warburton, an auto analyst at Bernstein Research, remarked that with most European original equipment manufacturers struggling to achieve breakeven in recent years, their profits derived from the LCV market have been subsidizing heavy passenger car losses.

Volkswagen Group’s LCV division posted an EUR300 million operating profit around the world in the first three quarters of 2012, compared with EUR328 million logged in the same period in 2011.

Although European brands and Ford currently do not encounter fierce competition from their Asian counterparts, they are now facing a real threat after Hyundai and Toyota disclosed a plan to place more emphasis on the European LCV market. In 2012, LCVs posted a 13-percent decline in sales in Europe to 1.44 million units, worse than passenger cars’ 8-percent drop to 12.6 million vehicles.

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