Russia Commercial Vehicle Market Size, Share & COVID-19 Impact Analysis, By Vehicle Type (Light Commercial, Heavy Commercial, and Buses & Coaches), By Power Source (Gasoline, Diesel HEV/PHEV, Battery Electric Vehicle and Fuel Cell Vehicle), and Country Forecast, 2021-2028

The Russia commercial vehicle market size was USD 9.32 billion in 2020. The market is projected to grow from USD 9.14 billion in 2021 to USD 11.31 billion in 2028 at a CAGR of 3.1% in the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with Russian commercial vehicles witnessing a negative demand shock across the country amid the pandemic. Based on our analysis, the market exhibited a decline of -14% in 2020. The sudden rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

The market in Russia is strongly dependent on local demand.  Despite the oil rate fluctuations and rising inflation at the end of 2019, the Russian automotive industry has recovered speedily due to government incentives supports under some programs. Moreover, the bus market and truck sales in Russia has risen due to the efforts & innovations from the domestic players such as KAMAZ, GAZ, LADA, UAZ, MAN, Scania, and others. The central pillar for Russia's growth is their government’s supports of the local manufacturers. Furthermore, the additional demand for the buses was seen in 2018 due to the FIFA world cup 2018 in Russia. The government also continued to support bus manufacturers, including schools under a federal program.

Additionally, tightening environmental standards, the need for park renewal of the commercial vehicles, and the rise of the sharing economy are the parameters expected to transform the market in larger cities in the medium run.

Decline in New-vehicle Demand Owing to COVID-19 Pandemic Has Impacted the Market Growth

Overall Russian economy is strongly affected due to the impact of COVID-19 pandemic. The automotive sector especially commercial vehicle segment has seen higher impact and as a result there is decline in the market. Further, the effects of the COVID-19 will be felt for long term and the complete recovery of this market will take around 3-4 years. Moreover, the entire supply chain of industries has been affected due to COVID-19 and certain vendors have announced that there may be delay in the payments to their suppliers that will cause further disturbance and automotive parts industry is also affected. Thus, these factors are anticipated to hamper the market growth across the country during the forecast period. Moreover, Europe has faced production interruptions at many tier-one suppliers. Due to the COVID-19 pandemic, the lockdown and economic crisis have severely impacted truck manufacturers' financials in 2020, with demand decreasing in some countries. For instance, Russian truck production fell to -7.3% in 2020 to just 74,780 units, the lowest annual output compared to the previous year. The importance of automated trucks generates a considerable amount of growth despite COVID-19 pandemic. It provides a contactless solution for transportation and avoids a companion worker's need to operate manually.

Companies such as KAMAZ PTC and Scania have seen a decline of around 6-12% in revenue due to the covid effect. This market in Russia will need 2-3 years to reach the pre-crisis level. Although the prediction of pandemic's span is difficult to expect, but the governments regulations and companies steps using various safety procedures & norms are likely to favor the automotive market.

LATEST TRENDS

Increasing Electrification Of Vehicle And Adoption Of Advance Technologies Will Set a Positive Trend for Market Growth

The rising air pollution caused by the fuel emitted by conventional vehicles is leading to environmental crises. This has encouraged manufacturing companies to shift towards sustainable sources of energy. The public transportation systems adopt electrification in commercial vehicles to promote zero-emission public transport while keeping the environment clean and breathable for the residents. The Russian government plans to invest around 10.5 billion dollars into electric and hydrogen vehicle development by 2030, showing prominent growth in commercial electric vehicles.

The OEMs are also working towards reducing the cost of batteries to encourage electric vehicles in the country. Various prominent players such as KAMAZ, Daimler, and Volvo are shifting towards electric vehicles to meet the rising market demand. Moreover, electric vehicles are also gaining popularity in the global market owing to their various properties such as high battery life, increased range, energy efficiency, and advancement in electronic systems. Similarly, commercial vehicles also observe a trend of automation driving the market growth. For instance, Moscow’s vast bus and tram network controller, Mosgortran, plans to add 2000 electric buses for public transportation by the year-end of 2020; Moscow is also preparing for fully electric buses by replacing all petrol or diesel-powered vehicles for public transportation by 2030.

In addition, Russian domestic manufacturers are also actively contributing to commercial vehicle's electrification with multiple strategies. For instance, in April 2020, MW motor and UAZ company has planned to build a four-wheeler off-roader, electric 469 Hunter. Similarly, one of Russia’s leading players, KAMAZ, has already partnered with Cummins to electrify buses and trucks. (fully electric & hybrid models).

DRIVING FACTORS

Development In Road Infrastructure And Industrialization, Government Support And Economic Performance Will Boost Market Growth

The rapid growth in the population and the increasing urbanization, expansion in the industrial sector, and developing infrastructures are the foremost reasons for the development of the market in Russia The industrial sector is expanding strongly, giving rise to high amounts of jobs in various sectors such as mining, construction, and tourism. Further, it has increased the number of commuters, thereby creating a high demand for public transport.

Large-scale investment projects under Public Private Partnership may give a boost to demand in the medium run. According to the government’s plans, expenditures on infrastructure projects are expected to total RUB 6.3 trillion between now and 2024. Government Support, the open business, and “Russia Hauler” state programs will increase demand for new trucks.

Furthermore, stabilizing macroeconomic indicators, entrepreneurs' growth, and revitalizing industries that use trucks (e.g., construction, commerce, and manufacturing) will positively impact the market. Also, rising SME activities across the country contribute significantly to recovering Russia’s economy that will further boost the sales.

With its vast oil reserves, Russia was the world’s 2nd largest oil producer in 2019, which will help develop the market. In Russia, over 40% of buses are 15 years or older and will need to be replaced in the near future is anticipated to show growth for the market. Developments in buyer structures, the E-commerce sector began to grow, requiring fast delivery of goods and more transport, all of which positively impacted commercial vehicle sales.

RESTRAINING FACTORS

Impact of Covid-19, Economic Condition, People Purchasing Power Constraint, May Restrain Market Growth

The truck segment is more sensitive to macroeconomic changes than the passenger cars segment. The economic slowdown in 2019 triggered by a slump in retail and construction activity has negatively affected Russian truck sales. Furthermore, the critical challenges consumers face in Russia are high maintenance, cost of repairing, product compatibility, product history, and lifecycle.

Due to economic growth slowdown, lower oil prices, and devaluation of the Russian ruble, all such factors altogether have affected consumer spending and thus resulted in the overall decline of the market growth & demand. In addition, the high risk of cybersecurity threats and the complexity faced by the driver in operating the advanced system may cause hazards to the vehicles and the passengers and driver. Any malfunctions or forced and unforced errors in these advanced systems may be dangerous and life-threatening for the users.

Thus, the complex mechanism coupled with the lack of skilled laborers and high replacement and maintenance costs of these systems are factors likely to restrain the Russia commercial vehicle market growth.  

SEGMENTATION

By Power Source Analysis

Diesel Segment Dominates Market

Based on the power source, the market is segmented into Gasoline, Diesel, HEV/PHEV, BEV, and Fuel Cell Vehicles.

The diesel segment holds the largest share of the Russian market, and the BEV segment is expected to lead throughout the forecast period. The diesel segment dominates the Russian light commercial market as the heavy-duty vehicle uses diesel as propulsion. The oil prices have seen a rise up to USD 63.0 per barrel in 2018, which would have impacted the sales positively in Russia. The gasoline segment also contributes significantly to diesel as the manufacturer preferably uses diesel as a propulsion medium for most commercial vehicle types. The LCV from the domestic manufactures and imported CV have gasoline as a power source.

Moreover, the HEV/PHEV vehicles have seen a gradual increase in sales from 2019, and companies are actively developing and involved in strategies for the broader growth of these vehicles. Furthermore, the Russian commercial vehicle market has also seen gradual electric bus (Battery EV) adoption in public transportation. For instance, in 2018, the Moscow government bought its first electric buses, and it plans to buy more than 800 every year for the city to operate an electric bus park of 1,800 units by the end of 2023. Additionally, Russia’s EV share will grow from 0.05% to 15% in the next 9 years in the global market.

The fuel cell segment is currently in the development phase as many Russian companies have started taking initiatives to explore potential opportunities in the hydrogen market. The continued government support in various policies and the local companies' recent development to develop hydrogen-powered trucks will demand the market in the future.

By Vehicle Type Analysis

Light Commercial Segment to hold Largest Market Share

Based on the vehicle type, the market is segmented into Light Commercial Vehicle (LCV), Heavy Commercial Vehicle (HCV), and Bus & Coaches.

The LCV segment accounts for the largest share in the Russian market. The dominance can be attributed to various factors, including a large number of vehicle presence and rising disposable incomes. Further, the LCV segment will be dominating in the forecast period due to predicted sales and increasing market development in the Russian market. Moreover, consumers' preferences, government spending, and the adoption of new technology in LCVs will significantly help grow their business in the coming years.

The HCV segment has low growth and a high penetration rate in 2020. Growing demand for excavation trucks in countries for industrial application and increasing government emphasis on the electrifying trucking industry segment is anticipated to boost the demand for HCV in the Russian market.

Domestic players' initiative to reduce Co2 emission and stringent regulation related to the transporting vehicles, governments inclination towards safety measures of passengers coupled with the development of charging infrastructure & use of advanced technology for the buses, coaches will help boost demand for this segment in coming years.

KEY INDUSTRY PLAYERS

Partnership With Local And International Players To Brighten its Market Prospects

In May 2021, KAMAZ and TATNEFT announced a joint venture to build refueling complexes using liquefied natural gas refueling units (LNG) to help consumers adopt LNG commercial vehicles.

In September 2018, KAMAZ and Cummins signed a MOU to develop electrified power solutions for a new product line of KAMAZ battery-powered vehicles.

In 2020, Volvo AB group had a strategic alliance with ISUZU group to divest UD Trucks to Isuzu Motors.

In November 2020, Volvo Group signed a joint venture agreement with Daimler Truck AG to develop and commercialize fuel-cell systems for heavy duty trucks.

LIST OF KEY COMPANIES PROFILED:

• KAMAZ (Naberezhnye, Chelny, Russia)


• Volvo AB (Gothenburg, Sweden)


• Hino Motors (Tokyo, Japan)


• Mercedes Benz (Stuttgart, Germany)


• Navistar International Corp (Illinois, U.S)


• GAZ (Nizhny Novgorod, NIZ, Russia)


• SCANIA (Södertälje, Sweden)


• ISUZU (Tokyo, Japan)


• PACCAR Inc.  (Bellevue, Washington, U.S.)


• URAL (Miass, Russia)

KEY INDUSTRY DEVELOPMENTS: 

• July 2021– Scania collaborates with AMAZON web services for the green IT-Initiative.  This will create an opportunity for the Russian commercial vehicle segment.


• January 2021- Scania has collaborated with Canadian Westport Fuel Systems to examine the usage of high-pressure direct-injection hydrogen fuel systems with SCANIA's latest-generation engines. Additionally, SCANIA has launched liftable and disengageable axles for 6X4 or 8X4 tipper and timber trucks.


• December 2020 –Volvo Group, Daimler Truck AG, IVECO, OMV has decided to expand the mass production of hydrogen trucks in Europe.


• March 2021- ISUZU Russia has launched the new low–capacity chassis for the Russian market. The load-carrying capacity of this chassis has been increased by 500 kg compared to the previous one. This chassis is available in three versions: Standard, Four-wheel drive, Gas engine. In addition, ISUZU, Hino motors ltd, and Toyota corporation announced the commercial vehicle partnership to combine the technology and resources to create a single platform. Due to this partnership, these companies are looking to speed up the introduction and popularization of technologies CASE (Connected, Autonomous, Shared, Electric) to overcome the transport sector's difficulties and create an environment with zero emission of CO2.


• March 2021-  GAZ company has launched mass production of LNG buses at Likino bus plant owned by GAZ group.

REPORT COVERAGE

The Russia commercial vehicle market report provides a detailed analysis of the market and focuses on key aspects such as leading companies, types, and leading product applications. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the marketing report encompasses several factors contributing to the market's growth over recent years.

Report Scope & Segmentation