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KEY NOTE Commercial Vehicles Market Report : June 2004

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This report covers: commercial vehicles, light, heavy, new vehicle registrations,current issues, congestion charging schemes, lorry road-user charging, end of life vehicles directive, climate change levy, heavy goods vehicles, buses, and, coaches, trade associations,

Companies covered include: Daimler Chrysler Holdings, Ford Motor Company, General Motor Holdings UK, Iveco, LDV, Leyland Trucks, Peugeotf motor Company, Renault UK, Volvo Truck & Bus, Mayflower/Transbus, Mayflower, Transbus, Daimlerchrysler, Ford Motor Company,General Motors, Iveco UK, Leyland truck,

EXECUTIVE SUMMARY

The market for commercial vehicles forms part of the UK's vehicle manufacturing industry and is a key component of the UK's manufacturing base. Key Note estimates that the apparent market for commercial vehicles in the UK was worth £3.13bn in 2003. The industry showed strong growth between 2002 and 2003, increasing in value by an estimated 19.3%.

The market is segmented into three distinct sectors: light commercial vehicles (LCVs), heavy goods vehicles (HGVs), and buses and coaches. The LCV and HGV sectors exhibited positive growth over the 1999 to 2003 review period and benefited from the strong UK economy, while the buses and coaches sector is struggling against a decline.

The sustained period of economic growth and stability experienced by the UK in recent years has been the major factor influencing increased demand for commercial goods vehicles since the late 1990s. Environmental legislation, reforms to the vehicle taxation regime and the introduction of energy taxation via the Climate Change Levy (CCL) have combined to shape the market throughout the early years of the 21st century.

Increased demand for LCVs since the beginning of the decade has been attributed to general growth in the UK economy and to increased demand for home deliveries, as more people shop on the Internet. Demand for HGVs has also risen during the early 2000s, reflecting the increasing requirement for road transport services. This has enabled the larger logistics firms to upgrade their HGV fleets with more environmentally efficient vehicles and thereby benefit from changes to vehicle excise duty. The performance of the buses and coaches sector has been less favourable over the review period, reflecting a downward global trend in demand for these vehicles. In addition, UK manufacturers have been experiencing intense competition from manufacturers overseas, which tend to have lower costs.

The outlook for the commercial vehicles market to 2008 is favourable. The industry is expected to benefit from predicted stable growth in the UK economy. During the next 5 years and beyond, environmental and associated political pressures will increasingly shape the market and influence developments, as demand for environmentally sustainable commercial transport for goods and passengers continues.

TABLE OF CONTENTS

Executive Summary

1. Market Definition

REPORT COVERAGE

MARKET SECTORS

Light Commercial Vehicles

Heavy Goods Vehicles

Buses and Coaches

MARKET TRENDS

Increased Domestic Demand for Commercial Vehicles

Imports are Rising at the Expense of Exports

Light Commercial Vehicles Lead the Market

Environmental Pressures Shape Design and Production

ECONOMIC TRENDS

Gross Domestic Product

Table 1: UK Gross Domestic Product at Current and Annual Prices (£m), 1999-2003

Inflation

Table 2: UK Rate of Inflation (%), 1999-2003

Unemployment

Table 3: Actual Number of Unemployed Persons in the UK (million), 1999-2003

MARKET POSITION

The UK

Table 4: New Vehicle Registrations in Great Britain (000), 1999-2003

Overseas

Table 5: Production of Commercial Vehicles in Leading EU Member States by Sector (number of units), 1999-2003

2. Market Size

THE TOTAL MARKET

Apparent Market by Value

Table 6: The Apparent UK Market for Commercial Vehicles by Value at Current Prices (£m), 1999-2003

Production by Volume

Table 7: UK Production of Commercial Vehicles by Type (number of units and %), 1999-2003

New Vehicle Registrations

Table 8: New Vehicle Registrations in Great Britain by Sector (000), 1999-2003

BY MARKET SECTOR

Light Commercial Vehicles

Table 9: New Light Commercial Vehicle Registrations in Great Britain (000 and %), 1999-2003

Heavy Goods Vehicles

Table 10: New Heavy Goods Vehicle Registrations in Great Britain (000 and %), 1999-2003

Buses and Coaches

Table 11: New Bus and Coach Vehicle Registrations in Great Britain (000 and %), 1999-2003

OVERSEAS TRADE

Table 12: UK Balance of Trade in Commercial Vehicles at Current Prices (£m), 1999-2003

Main Import Markets

Table 13: Main UK Import Markets by Balance of Payments by Country (£m and %), 2002

Exports

Table 14: Main UK Export Markets by Balance of Payments by Country (£m and %), 2002

3. Industry Background

RECENT HISTORY

NUMBER OF COMPANIES

Table 15: Number of UK VAT-Based Enterprises Engaged in the Manufacture of Motor Vehicles and Trailers by Turnover Sizeband, 2003

EMPLOYMENT

Table 16: Employment in the UK Motor Vehicles and Trailers Manufacturing Sector (000), 1999-2003

Table 17: Number of UK VAT-Based Enterprises Engaged in the Manufacture of Motor Vehicles and Trailers by Employment Sizeband, 2003

REGIONAL VARIATIONS IN THE MARKETPLACE

Table 18: Regional Distribution of Commercial Vehicle Manufacturers in the UK, 2004

DISTRIBUTION

HOW ROBUST IS THE MARKET?

LEGISLATION

End of Life Vehicles Directive

Advertising Standards and Practice

KEY TRADE ASSOCIATIONS

British Industrial Truck Association

British Vehicle Rental and Leasing Association

Freight Transport Association

International Organisation of Motor Vehicle Manufacturers

The Road Haulage Association

Society of Motor Manufacturers and Traders

Other Associations

4. Competitor Analysis

THE MARKETPLACE

Market Leaders

DaimlerChrysler UK Holding PLC

Company Structure