The commercial vehicle market in the GCC region has shown substantial growth, driven by several critical factors, including evolving customer demands, emerging market trends, regional characteristics, and robust economic conditions.
A recent analysis by Glasgow Consulting Group (GCG) valued the market at $13.7 billion in 2023, with a projected Compound Annual Growth Rate (CAGR) of 6.6% from 2023 to 2028. Light Commercial Vehicles (LCVs) currently dominate the market, making up 55.5% of total sales in 2023, a trend expected to continue due to their versatility and efficiency for various commercial applications.
According to GCG director Vishal Pandey a key driver of growth is the GCC region’s strong economic expansion, fuelled by the construction, oil and gas, and tourism sectors, coupled with supportive government policies and infrastructure investments.
“Consumer demand in the GCC favours commercial vehicles that prioritise reliability, durability, and fuel efficiency, characteristics that are highly valued in sectors such as construction, oil and gas, and retail,” says Pandey. “The shift away from an oil-dependent economy has encouraged governments to diversify into sectors like manufacturing, retail, and tourism, further boosting the need for commercial vehicles to support this development.
“Additionally, the rise of cold chain logistics, essential for sectors like pharmaceuticals and perishable goods, has heightened the demand for specialised vehicles with temperature control capabilities. Infrastructure projects, including investments in seaports, airports, roads, and logistics hubs, are critical components of the GCC’s development plans, amplifying the demand for commercial vehicles designed to support these initiatives efficiently.”
Rising fuel prices have also spurred an increased interest in fuel-efficient commercial vehicles, a trend aligned with the GCC’s strategic geographical position. Located near Europe, Asia, and Africa, the region serves as a crucial hub for international trade, where fuel efficiency plays a pivotal role in cost-effective logistics.
Moreover, government policies promoting eco-friendly vehicles have accelerated the adoption of electric and hybrid commercial vehicles. The rapid growth of e-commerce across the GCC further drives demand for LCVs, especially for last-mile deliveries, as more goods are transported directly to consumers.
Technological advancements in areas such as automation, IoT, and data analytics are – despite some ‘scepticism’, increasingly integrated into fleet management, offering businesses greater operational efficiencies and improved asset tracking, notes Pandey.
Despite these growth factors, the GCC commercial vehicle market faces several challenges.
The unique climate and terrain in the region necessitate commercial vehicles equipped with high ground clearance, all-wheel drive, and heavy-duty suspension to navigate harsh conditions. Additionally, the volatility in oil prices presents a challenge, as fluctuations impact vehicle demand, particularly in sectors heavily reliant on fuel. The market is also marked by intense competition among manufacturers, making it difficult for individual companies to capture significant market share. Increasingly stringent emission norms and safety regulations add to the complexities, as companies must continuously adapt their vehicles to meet new requirements, which can drive up costs.
Saudi Arabia (KSA) and the United Arab Emirates (UAE) are the leaders in the GCC commercial vehicle market, especially within the truck segment, which includes pickups, light-duty, medium-duty, and heavy-duty trucks. Key industries such as manufacturing, construction, retail, and transportation drive the demand for trucks in these countries. Economic reforms and diversification initiatives in KSA and UAE have accelerated this growth, with both countries heavily investing in infrastructure and logistics to support their expanding economies.
Technological advancements, particularly in telematics, have significantly impacted the commercial vehicle market in the GCC. Although telematics faced initial resistance due to high installation costs and limited awareness, it has now become a major selling point as fleet owners recognize its benefits.
“Initially, telematics services faced scepticism in the market, as many potential users were unfamiliar with the technology, which hindered its acceptance. Additionally, the installation costs posed a challenge to demand,” Pandey expands. “As trucks regained their foothold in this sector, telematics emerged as a crucial factor in driving vehicle sales.”
Telematics allows fleet operators to monitor vehicle performance, track locations, and manage fleet status in real-time, offering insights into areas such as fuel consumption, emissions, and driving distances.
“Long-haul truck drivers often travel across the GCC to deliver goods for the logistics and construction industries. Vehicle telematics enables fleet managers to track vehicles accurately, providing details such as truck speed, load, and tachograph data. Given that fuel consumption is a major concern during long journeys, telematics simplifies the monitoring process and identifies potential savings,” says Pandey.
“Fleet managers can access precise reports on driving distances, emissions, and fuel consumption, along with timely updates on vehicle status to ensure optimal performance. Easy-to-understand alerts provide information on issues, odometer readings, engine hours, and more. Due to its numerous advantages, telematics has become a key selling point for truck manufacturers. Transport companies are actively integrating telematics into their fleet management systems, with 50-60% of customers currently benefiting from this technology in their heavy-duty fleets.”
Dubai’s Roads and Transport Authority (RTA) has mandated telematics for heavy vehicles to reduce accidents, enhance safe driving practices, and minimise environmental impact. Few sectors are having to take sustainability more seriously than waste management.
“For example, municipal trucks involved in waste management are now equipped with telematics systems to streamline waste collection and management,” Pandey explains.
“Utilising advanced IoT-based devices, waste bins are outfitted with sensors, creating a highly integrated system that allows for effective monitoring, management, and transportation of trash bins, drivers, and vehicles.”
The electric commercial vehicle (EV) market in KSA and UAE is poised for significant growth due to supportive government policies and private sector investment.
“Driven by government support, private investment, and favourable policies, new models and technological advancements are fuelling demand,” says Pandey. “Electric trucks featuring cutting-edge technologies such as telematics, GPS, Advanced Driver Assistance Systems (ADAS), and IoT are driving the growth of commercial electric vehicles. Additionally, numerous manufacturing companies are channelling investments into the electric automotive sector to enhance battery efficiency for long-distance performance and to develop improved technologies, paving the way for superior electric vehicles in the years ahead.”
While light and medium electric commercial vehicles from European and Japanese manufacturers lead this sector, the demand for long-haul heavy electric trucks is hindered by current battery limitations. However, manufacturers are investing heavily in research to enhance battery efficiency and performance for long-distance transport, which is essential for the GCC’s logistics needs.
“As GCC governments pursue economic diversification and invest in construction, food and beverage, manufacturing, retail, and transportation, high-performance trucks will remain in high demand due to their heavy-load capacity.”
As economic diversification continues, the demand for high-performance trucks across sectors such as construction, manufacturing, retail, and logistics will likely sustain. Although high production costs remain a barrier to the adoption of electric trucks in the commercial sector, advancements by leading automotive innovators like Tesla, GM, and Volvo promise to shape a cleaner, more efficient future for the region’s commercial vehicle market.
“Environmental concerns and regulatory compliance are driving the commercial vehicle sector towards electrification. Light and medium electric commercial vehicles are already available, with European and Japanese brands leading the market,” continues Pandey.
“However, meeting the power demands of long-haul heavy electric vehicles remains a challenge. As such, Manufacturers are investing heavily in electric automotive research, focusing on: advancing battery technology for efficient long-haul performance and developing improved electronic vehicles. This concerted effort is expected to transform the region’s electric vehicle landscape.”
With a renewed focus on drivers, market challenges, and technological shifts, the future of the GCC commercial vehicle market will be one of strategic importance to the regional economy.
“As GCC governments pursue economic diversification and invest in construction, food and beverage, manufacturing, retail, and transportation, high-performance trucks will remain in high demand due to their heavy-load capacity.”
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