This document discusses several trends affecting commercial vehicle strategies from 2009 to 2020, including: 1. Increasing demand for hybrid and electric commercial vehicles, especially for short-haul urban deliveries, as cities see de-urbanization and the rise of megacities. 2. A polarization of commercial vehicle classes, with growth in light and heavy vehicles globally and in regions like North America, China, and India. 3. Clear interest from fleets in hybrid powertrain technologies to lower emissions and costs, though challenges remain regarding infrastructure, weight penalties, and upfront costs. 4. The potential for "health, wellness, and well-being" technologies to become a new factor in commercial

1. Advanced Technologies Catalyzing
Recalibration of Growth Strategies
in a Flat-World Eco-System
Sandeep Kar
Global Manager – Commercial Vehicle Research

2. In the Developed World: Increasing Trend of De-Urbanization – Polarization of
Commercial Vehicle Classes and Rising Demand for Hybrid / Electric Commercial Vehicles
Most offices / retail centers move to the first belt suburbs except non cost sensitive activities: city centres becoming
shopping areas (small scale deliveries) for expensive goods and living areas for “double income, no kids” households
– Hybrid / electric LCVs deliver peak efficiency and cost benefits in intra-city areas
Manufacturing plants, industry offices move out to the first belt area as also medium income families while
manufacturing facilities and low-medium income families relocate in the second and third belt areas with logistics
centers created on 2nd belt periphery
‘Green wave’ families living outside cities in outer suburban area. Hypermarkets and malls mostly created inside the
third belt low cost area (large scales deliveries)
– HCVs, long-haul vehicles, and inter-modal transportation centers support hub-and-spoke
logistics infrastructure
1950s Urbanization
2000s Suburbanization
2015s Network City
Urban sprawl, first highways and ring road
Creation of the historic centre and districts
Third suburban area and cities along the highways
created, ring road overblown by the urban sprawl
2020s: Branded Cities
Source: Frost & Sullivan
Ring Road
Motorway, Living
Areas growing
outside the ring
road as seen in
London

3. In the Developing World: By 2020, We Will See Emergence of About 26
Mega Cities Creating Demand for “City Trucks”
Example 1: Johannesburg and Pretoria becomes one BIG Mega City called “Jo-Toria”
Example 2: Town planning could evolve with offices and homes adjacent to each other
or within a small compound area (e.g. Chennai, Sao Paolo)
Core City
Satellite
Towns
HomeOffice
2020 + Interconnectivity with Sub Satellite Towns

4. Global Commercial Truck Production: Polarization of Truck Classes – Light and
Heavy Commercial Vehicle Segments Growing Rapidly
LCVs and HCVs emerging as most prevalent vehicle classes in the global and North American markets, implying polarization of
demand. MCVs losing considerable market share in EU. HCVs and LCVs experiencing demand growth in China and India.
Higher GVWR ratings imply heavier mega-trucks in Western EU and NA.
2008
Heavy CV 16.9%
Medium CV 7.1%
Light CV 76.0%
17.89 Million CV
MD+HD CV = 4. 2 Million
22%
10%
62%
7%
24%
6%
63%
7%
18%
47%
29%
6%
16%
11%
67%
6%
19%
7%
67%
7%
16%
38%
40%
7%
2008 2020
Europe North America Asia Others
2020
23.49 Million CV
MD+HD CV = 4. 7 Million
Heavy CV 15.4%
Medium CV 4.3%
Light CV 80.3%
Light
Commercial
Vehicles
Medium
Commercial
Vehicles
Heavy
Commercial
Vehicles

5. Highest Ranking Benefits of Powertrain Technologies:
Clear and Present Demand for Hybrid Powertrain Technologies
6%
5%
5%
17%
59%
5%
6%
6%
6%
6%
9%
20%
19%
17%
5%
8%
8%
10%
10%
22%
18%
12%
0% 20% 40% 60% 80% 100%
#1 Ranking #2 Ranking #3 Ranking
Access to Powertrain Support Infrastructure
Highest Ranking Benefits of Powertrain Technologies (N = 109)
Lower Level Emissions
Lower Weight Penalty
Reduce Idling
Residual Value
Effectiveness Under All Operating Conditions
Attractive Lifecycle Costs
Longer Lifecycle
Reduced Maintenance Requirement
Reliability
Fuel Efficiency
Note: Proportions less than three not shown numerically in chart.
Q: When purchasing powertrain
technologies, please rank the top three
benefits that are most important to your
fleet from the following list below?
Hybrid Powertrain
Technologies – offer
solutions but pose
challenges too!!

6. 2009 2020
Fuel-
EconomyEmissions
Lifecycle
Cost
Idling
Driver
Retention
Truck Design
Issues
Class 6-8 Trucks for 2020 – Hybrids Rising in North America
and Could Make up 15% of Total Sales by 2020
Hybridization of North American Commercial Trucks (Class 6-8):
Production Volumes and Market Shares of Major OEMs (2008-2015),
Hybrid Power Source (2009-2012)
2008
PACCAR 27%
Navistar 62%
Daimler 11%
Hybrid Production 600
2015
PACCAR 23%
Navistar 39%
Daimler 16%
Hybrid Production 39,400
Volvo/Mack 11%
Others 11%
8% of Class 6-8 Truck
Production
0
2,500
5,000
7,500
10,000
12,500
2009 2010 2011 2012
Electric Hybrid Hydraulic Hybrid
1,100
2,300
5,600
10,700
Hybrid Truck Production
Conventional HD Trucks
Hybrid HD Trucks

7. Electric Commercial Vehicle Market: Open for
Business
Without
Government
funds EV do
not have a
future, as
initial cost
is very high
Electric Vehicle Market:
Definition of Electric Commercial
Vehicle Attractiveness (NA), 2009
Standard Route from a depot /
warehouse / distribution center
to various client locations and
back to warehouse
Depot
Total of 18,929 units sold in 2016 from
1,982 units in 2010 at CAGR of 38%
Best Fit for Electric Commercial Vehicles: Urban/semi-urban
distribution (typically under 100 miles) and GVWR< 7.5 Tonnes
Inter Urban distribution1118
Long distance1726
40
12
7.5
3.5
GCW / GVW 1*GCW / GVW 1*
(tonne)(tonne)
Long distance25
Urban distribution7.2
Urban distribution4
Urban distribution1.5
Pure ElectricPure Electric
AttractivenessAttractiveness
TypicalTypical
ApplicationApplication
Load CapacityLoad Capacity
(tonne)(tonne)

8. Voice of Your Customers: Fleet Managers Demanding
Less Data, More Information that Enables Cost Savings
41%
20%
7%
14%
9%
10%
7%
9%
6%
6%
11%
5%
6%
6%
9%
7%
6%
10%
9%
7%
8%
20% 16%
15%
15%
0% 20% 40% 60% 80%
#1 ranking #2 ranking #3 ranking
Prognostics
Scheduling
Security of Mobile Resources
Remote Diagnostics & Prognostics
Driver Retention & Insulation from Technician Shortage
Back-office Automation
Real-time Monitoring of Key Vehicular Systems
Regulation Compliance
Screen Unsafe Drivers & Reduce Unsafe Driving Practices
Mobile Resource (Driver & Vehicle) Productivity Maximization
Cost Savings
Note: Proportions less than three not shown numerically in chart.
Safety of Mobile Resources
Product Demand (Application)
Remote
Diagnostics &
Prognostics at
$12/month
50%
Back-office
Automation at
$6/month
50%
Q: When purchasing telematics
technologies, please rank the top three
benefits that are most important to your
fleet from the following list below?

9. Purchase Intentions of Advanced Safety
Technologies: Not Just About Safety
Source: Frost & Sullivan
Q: How likely you'd be to buy any of these safety
technologies…
Advanced Safety TechnologyAdvanced Safety Technology
(N=109)(N=109)
Level of Purchase IntentionLevel of Purchase Intention
Active
(Are Considering)
Passive
(Might Consider)
No Interest
Tire Pressure Monitoring SystemTire Pressure Monitoring System 55% 39% 6%
Disc Brakes and Larger Drum BrakesDisc Brakes and Larger Drum Brakes 51% 46% 3%
Tractor-based Roll Stability ControlTractor-based Roll Stability Control 35% 57% 8%
Blind-spot Detection SystemBlind-spot Detection System 31% 63% 6%
Driver Drowsiness/Distraction WarningDriver Drowsiness/Distraction Warning 31% 62% 7%
Electronic Stability ControlElectronic Stability Control 31% 61% 8%
Lane Departure WarningLane Departure Warning 31% 60% 9%
Trailer-based Stability ControlTrailer-based Stability Control 29% 57% 14%
Forward Collision WarningForward Collision Warning 19% 69% 12%
Adaptive Cruise ControlAdaptive Cruise Control 18% 69% 13%
Automatic Collision Mitigation SystemAutomatic Collision Mitigation System 18% 69% 13%
Night VisionNight Vision 17% 67% 16%

10. So What Will be the Next Big Factor for Product
Differentiation After ‘Soft Technologies’
OEMs generally tend to focus on one of the
7 key factors (as shown on the right) for
positioning of their vehicle brands
For each factor OEMs evaluate whether they
want to be ‘best-in-class (BIC)’, ‘amongst the
leader’ or ‘a follower’
Those factors which strengthen their brand
values are normally bracketed in the ‘BIC’ box
(e.g. Volvo for safety, Navistar for telematics,
Kenworth for aerodynamics)
This new factor will evolve from the current
focus on environment. We already see huge
evidence of this factor in modern society
“Health, Wellness and Well-Being”
is Expected to be the Next Key Product
Differentiation Factor for OEMs
Factors which currently form basis
of differentiation among OEMs
Telematics
Driving Experience
Comfort and Convenience
Lifecycle Cost
Safety
Vocation Applicability
Fuel-efficiency
Source: Frost & Sullivan

11. Frost & Sullivan Conducted a Focus Group, Findings of
Which Showed that the 3 Cornerstones – The Body, Mind
and Soul – Contribute to Driver’s Definition of HWW
The Truck Cabin is a WORKPLACE,
Regulations Expected to Enter The Cabin
Mood
Sense of connectivity
Stress levels
Mental health
Sense of optimism
Attitude
Security
Safety
Personal values
Personal fulfilment
Self image / self actualisation
Sight / vision
Touch & feel
Smell /
breathing
Noise
Temperature
Wellness
MindBody
Soul

12. Suppliers Technology Portfolio Analysis (NA):
Powertrain, Telematics and Safety Technologies to Experience Most Growth
TechnologyTechnology Installation%Installation%
20052005
Installation %Installation %
20152015
RevenuesRevenues
2005 (Million $)2005 (Million $)
RevenuesRevenues
2015 (Million $)2015 (Million $)
Selective Catalytic Reduction (SCR) (Class 6-8) 0.0 76.0 0.0 2,657.4
Automatic Transmission (Class 6-8) 17.8 21.2 566.5 932.4
Exhaust Gas Recirculation (EGR) (Class 6-8) 0.0 24.0 0.0 479.5
Diesel Particulate Filter (Class 6-8) 0.0 100.0 0.0 412.5
Hybrid Electric Powertrain (Class 6-8) 0.0 5.7 0.0 332.7
Diesel Oxidation Catalyst (Class 6-8) 27.1 100.0 165.0 247.5
Hybrid Hydraulic Powertrain (Class 6-8) 0.0 2.3 0.0 74.1
Electronic Stability Control (Class 6-8) 2.0 45.7 6.3 77.2
Tire Pressure Monitoring System (Class 6-8) 0.0 47.6 0.0 64.1
Integrated Collision Mitigation System (Class 6-8) 0.0 12.1 0.0 63.0
Lane Departure Warning (Class 6-8) 0.9 6.6 3.1 13.2
Blind Spot Detection (Class 6-8) 0.9 17.1 1.7 12.2
Forward Collision Warning (Class 6-8) 0.8 3.6 4.2 11.8
Telematics – Penetration of CV Population 3.8 28.2 957.7 6,500.3
Telematics – Penetration of School Bus
Population
2.7 37.4 4.5 82.3
LeadingNorthAmerican
Heavy-truckTechnologies
Fuel Economy, Mobile Resource Productivity,
Safety, Regulation Compliance Cost Reduction

13. Key Trends and Performance Indicators, (2009-2020)
Trends and
Performance
Indicators
Global Harmonization of
Platforms and Technologies
Cap and Trade Operating Environment
Alternative Powertrain Technologies
Rising Distributed Electronics- MRM,
Prognostics Less Data More
Information
Expansion in Soft
Technology Revenues
Diminishing Engine Footprint
Legislative Move
Towards Higher GVWR
Trend Towards Vertical Integration
Steady Reduction in Truck
and System Form-Factor
BRIC Strategy, NA and EU Strategy
LCVs and Mega-trucks (3.5T to <60T)
Baseline Globally Harmonized Emission and Safety Technologies
Greater Reliance on Advanced Turbochargers, Advanced Propulsion Technologies
Mega Trucks, More Axles per Truck, Revenue Expansion for Chassis
Systems, Inter-modal Exposure
Active Role in Policy Formulation to Benefit From Regulations
Virtual Integration, Consolidation, Global Diversification,
Adjacent Market Opportunities
Concerted Strategies Towards Weight Reduction, 3,000 LBs
Reduction= 500 Gallons of Fuel, 5 MT of CO2 reduction
Coexistence of Hybrid, CNG, LPG, Biodiesel , Electric, Fuel-cell
Multiplexed Architecture, Electronic Interfaces, Vehicle Networking
Technologies, Time and Mission Critical Information Delivery
15-20% of Revenues of Truck and System
Sales Through Soft Technologies

14. Questions?
Sandeep Kar
Global Program Manager – Commercial Vehicles Research
Direct: 416.490.7796
Fax: 416.490.1533
Email: skar@frost.com