GCC’s commercial vehicles market to see continued growth up to 2028

07 October 2024 Consultancy-me.com

The market for commercial vehicles in the GCC has witnessed remarkable growth in recent years, with that growth only set to continue its track in the years ahead, according to market study from Glasgow Research & Consulting. A round-up of the market’s key developments and notable trends to watch.

Valued at $13.7 billion in 2023, the GCC commercial vehicles market is according to Glasgow Research & Consulting expected to grow at a compound annual growth rate (CAGR) of 6.6% in the period between 2023 to 2028. Key drivers of market expansion include favourable macroeconomic conditions, shifting customer preferences, emerging market trends, and sector innovation.

Robust economic growth, backed by construction, oil & gas, and tourism, along with supportive government policies and infrastructure investments, are further propelling the demand for commercial vehicles.

Light commercial vehicles (LCV) dominate the market, accounting for 55.5% of total sales in 2023. Around 180,000 medium commercial vehicles (MCV) and heavy commercial vehicle (HCV) were sold last year.

GCC's commercial vehicles market to see continued growth up to 2028

Source: Glasgow Research & Consulting

Factors playing a role in the changing demand for commercial vehicles include:

  • Economic Diversification: Governments are shifting focus from oil-dependent economies to diversified industries like manufacturing, retail, and tourism.
  • Infrastructure Development: Investments in seaports, airports, roads, and logistics facilities enhance connectivity and efficiency. Government initiatives to enhance infrastructure drive demand for commercial vehicles.
  • Strategic Location: GCC’s geographical proximity to Europe, Asia, and Africa makes it an attractive hub for international trade.
  • Increasing E-commerce: Rising e-commerce adoption fuels demand for light commercial vehicles for last-mile delivery.
  • Expansion of cold chain logistics.
  • Fuel Efficiency: Demand for fuel-efficient vehicles grows due to increasing fuel costs.
  • Electric and Hybrid Vehicles: Governments promote eco-friendly vehicles, driving adoption.
  • Technology: Growing adoption of technology such as automation, internet of things, and data analytics.

The commercial vehicles sector in the GCC also faces its challenges like:

  • The GCC’s unique climate and terrain require specialized commercial vehicles with features like high ground clearance, all-wheel drive, and heavy-duty suspension.
  • Volatility in Oil Prices: Fluctuating oil prices impact commercial vehicle demand.
  • Competition: Intense competition among manufacturers affects market share.
  • Regulatory Framework: Stricter emission norms and safety regulations pose challenges

Country market share

The GCC region’s commercial vehicle market is led by Saudi Arabia (KSA) and the United Arab Emirates (UAE). Within this market, trucks comprise the largest segment, encompassing pickups, light-duty, medium-duty, and heavy-duty trucks.

GCC's commercial vehicles market to see continued growth up to 2028

Source: Glasgow Research & Consulting

Economic growth in KSA and UAE is projected to accelerate, driven by robust reform initiatives. Key sectors driving truck demand include manufacturing, construction, retail, and transportation.

Major trend: Technology in commercial vehicles

Technological innovations in the automotive industry, along with the launch of sophisticated features in high-performance trucks, have significantly enhanced the commercial vehicles market GCC. As trucks regained their foothold in this sector, telematics emerged as a crucial factor in driving vehicle sales.

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.

Telematics provides fleet owners with the ability to monitor driver locations, vehicle performance, fleet status, and other critical information. As consumer education improved and installation and subscription costs became more rationalized, more users began to explore the advantages of telematics.

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. 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.

In Dubai, the Roads and Transport Authority (RTA) has enacted a regulation mandating that all heavy vehicles be equipped with telematics systems. This initiative aims to reduce heavy vehicle accidents, promote safe driving practices, enhance infrastructure, and minimize the financial, human, and environmental impacts associated with heavy trucks.

For example, municipal trucks involved in waste management are now equipped with telematics systems to streamline waste collection and management. Utilizing 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.

Educational efforts and cost rationalization have increased adoption, particularly among long-haul truckers serving logistics and construction sectors across the GCC.

Major trend: Electric driving

Electric trucks featuring cutting-edge technologies such as telematics, GPS, Advanced Driver Assistance Systems (ADAS), and Internet of Things 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.

The electric vehicle market in KSA and UAE is poised for significant growth, driven by government support, private investment, and favourable policies. New models and technological advancements are fuelling demand.

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. However, meeting the power demands of long-haul heavy electric vehicles remains a challenge.

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.

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.

GCC’s economic diversification and sectoral investments will sustain demand for high-performance trucks. Electronic trucks will drive market growth, with new models and technologies from Tesla, GM, and Volvo. Yet, higher production costs may challenge electric vehicle adoption in the commercial segment.

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