The global light duty vehicles market size was valued at USD 522.62 billion in 2018 and is expected to register a CAGR of 8.5% from 2019 to 2025. Light duty vehicle is defined as a truck or car with Gross Vehicle Weight Rating (GVWR) of less than 8,500 lbs. The demand for light duty vehicle is expected to grow owing to the lower volume of air pollutants it tends to emit. On the other hand, stringent regulations aimed at reducing vehicular emissions are expected to encourage the adoption of electric light duty trucks, thereby driving the market growth over the forecast period.
Governments in various countries have implemented stringent regulations aimed at arresting the rising levels of vehicular pollution. For instance, the Government of India has implemented the Bharat Stage Emission Standards (BSES) that regulate the output of air pollutants from vehicles. The European Union has also established European emission standards that define the acceptable limits for exhaust emissions. Light duty vehicle tends to emit lower volumes of air pollutants and is hence turning out to be the preferred vehicle to transport people and goods.
Automotive OEMs are increasingly rolling out light duty vehicle equipped with fleet tracking, navigation, and safety features. Advances in sensor technologies, location-based services, and analytics are paving the way for an aggressive adoption of autonomous light duty vehicles. The proliferation of IoT has enabled the integration of telematics systems, such as fleet telematics to track light duty vehicle, into automobiles. This has subsequently enabled the development of driverless passenger cars and self-driven rental cars. The growing trend of offering dynamic shuttles as part of on-demand passenger services is another major factor contributing to the growing market for light duty vehicles.
When it comes to the logistics & transportation industry, supply chain complexities are increasing continuously. Last mile delivery is evolving dynamically in line with the customers’ changing preferences. Innovations in last mile delivery and passenger transportation are poised to expand the application portfolio of light duty vehicles. As such, the market is expected to grow over the forecast period in line with the expanding e-commerce industry and the widening application portfolio of light duty vehicles.
Regulations drafted by various governments across the world for increasing the efficiency of light duty vehicle bode well for the growth of the light duty vehicles market. For instance, the Corporate Average Fuel Economy (CAFE) standards issued by the U.S. government focus on improving the average fuel economy of cars and light duty trucks sold in the U.S. As such, automakers are particularly focusing on reducing the weight and improving the fuel efficiency of light duty vehicles. Advances in drivetrain technologies are also allowing automakers to offer fuel-efficient light duty vehicles.
On the basis of vehicle type, the market for light duty vehicle has been further segmented into passenger car, van, Sports Utility Vehicle (SUV), and pickup trucks. The passenger car segment accounted for a considerable market share in 2018 and is expected to grow at a steady rate over the forecast period. The growth of the segment can be attributed to the growing adoption of passenger cars by incumbents of the tourism industry. The van segment also accounted for a significant market share in 2018 and is expected to register a high CAGR over the forecast period. Incumbents of the healthcare and e-commerce industries are expected to increasingly deploy vans in their fleets. Vans are also expected to be adopted aggressively for postal services, ambulance services, mobile workshops, and policing and rescue operations.
The pickup truck segment is expected to emerge as the fastest-growing segment owing to the rising adoption of pick-up trucks for towing other vehicles. The larger torque provided by pickup trucks allows them to pull trailers, boats, campers, and other vehicles conveniently. Besides, these trucks can also be utilized on all types of terrains and weather conditions. The growing popularity of small fuel-efficient vehicles, such as Hyundai Santa Cruz, is further expected to drive the growth of the pickup truck segment over the forecast period.
On the basis of fuel type, the market for light duty vehicle has been further segmented into diesel, gasoline, hybrid, and electric. The gasoline segment dominated the market in 2018. The gasoline-fired vehicle tends to emit lesser emissions as compared to diesel-fired vehicle and can also be procured affordably. However, the electric segment is expected to register the highest CAGR over the forecast period owing to the growing demand for high-performance and emission-free vehicles. Advances in technology coupled with the proactive government initiatives to reduce vehicular emissions are encouraging the development and adoption of electric vehicles and the rollout of electric vehicle charging infrastructure, thereby driving the growth of the electric segment.
Manufacturers of light duty electric vehicles are incentivizing customers for buying electric vehicles. For instance, in North America, bonus payments and discounts on insurance are being offered to the buyers of electric vehicles. At the same time, while countries, such as China, France, and Norway, have imposed stringent rules and regulations aimed at reducing vehicular emissions, other countries, such as China, the U.K., the Netherlands, and the Czech Republic, have implemented low emission zones in certain areas. Such initiatives are also expected to drive the growth of the electric segment.
On the basis of drivetrain, the market for light duty vehicle has been further segmented into Front Wheel Drive (FWD), Rear Wheel Drive (RWD), Four Wheel Drive (4WD), and All-Wheel Drive (AWD). Rear-wheel drive happens to be the most preferred type of drivetrain and is commonly found in passenger cars. The rear-wheel drive helps in improving the traction and balancing of the vehicle. As a result, a rear-wheel drive car accelerates faster than a comparable front-wheel drive car. These benefits associated with the rear wheel drivetrain are driving the growth of the segment.
The AWD segment is expected to register the highest CAGR over the forecast period. AWD includes a front, rear, and center differential that distributes power uniformly among all the four wheels of the vehicle. AWD systems are usually used for sports utility vehicles (SUVs) and minivans. AWD systems also play a decisive role in excessive weather conditions. As such, AWD vehicles are particularly known to improve the safety and performance of vehicles in cold weather. AWD systems are also suitable for vehicles used for off-road racing in muddy, snowy, and rocky terrains.
On the basis of transmission, the market for light duty vehicle has been further segmented into manual and automatic. The manual segment dominated the market in 2018. The manual transmission provides higher fuel efficiency and typically consumes 5%-10% lesser fuel as compared to the automatic transmission. Manual transmission-based vehicles also tend to be cheaper as compared to their automatic transmission counterparts. Moreover, there has been a significant rise in the demand for vehicles with clutch-less manual transmission, which eliminates the need for the clutch pedal the driver needs to press before changing gears.
The automatic segment is expected to register the highest CAGR over the forecast period owing to the growing end-user preference for automatic transmission systems. In a manual transmission, the fuel efficiency of the vehicle depends on the driver’s proficiency. On the contrary, automatic transmission helps in enhancing the performance irrespective of the driver’s proficiency, thereby reducing emissions and delivering better fuel efficiency. The launch of stringent fuel efficiency norms, such as the Corporate Average Fuel Economy (CAFE) standards, has also triggered the demand for fuel-efficient transmission systems, such as Continuously Variable Transmission (CVT).
On the basis of region, the light duty vehicles market has been segmented into North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa. North America dominated the market in 2018 owing to the growing adoption of electric vehicles in line with the government initiatives favoring the development and adoption of electric vehicles and the rollout of electric vehicle charging infrastructure. Moreover, the U.S. also happens to be the largest manufacturer of light duty vehicles. However, Asia Pacific is expected to emerge as the fastest-growing regional market over the forecast period as a result of the evolving e-commerce industry, particularly in China, India, and Japan. Stringent regulations aimed at curbing vehicular emissions are also expected to drive the demand for light duty electric vehicles in Asia Pacific.
Europe accounted for a considerable market share in 2018 owing to the increasing adoption of light duty trucks for inland cargo transports within Europe, where most of the cargo transportation occurs via road. According to Eurostat, over 75% of inland cargo transports within the EU, i.e., about 1,750 billion metric ton-kilometer (tkm), occur by road. On the other hand, initiatives being pursued by the automotive manufacturers in the region to implement new ride-sharing platforms are driving the demand for passenger cars. For instance, Daimler entered into a joint venture with Via, a start-up focused on developing scalable and on-demand ride-sharing solutions, to introduce on-demand shared rides in Europe.
Key players in the market for light duty vehicle include BMW AG, Daimler AG, Fiat Chrysler Automobiles N.V., Ford Motor Company, General Motors Company, Honda Motor Company, Ltd., Hyundai Motor Company, Nissan Motor Company, Ltd., Subaru Corporation, and Toyota Motor Corporation, among others. All these players are trying aggressively to strengthen their foothold in the market. As such, market players are particularly emphasizing on launching light duty vehicles based on new and innovative platforms. Some of the OEMs, such as Renault-Nissan, Volkswagen, and Daimler, are also working on building common platforms for light duty vehicles and passenger vehicles as part of the efforts to reduce lead times and save on development costs.
Light duty vehicle OEMs need to source more than 50% of the components from their suppliers. Hence, they prefer establishing healthy partnerships with raw material suppliers to ensure an uninterrupted supply of components. Leading market players are also investing aggressively in research & development in order to come up with innovative technologies and gain a competitive advantage over their rivals. They are also partnering with government agencies for the development of EV charging infrastructure.
Base year for estimation
Actual estimates/Historical data
2014 - 2017
2019 - 2025
Revenue in USD Billion, Volume in Million Units, and CAGR from 2019 to 2025
North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.
U.S., Canada, U.K., Germany, India, China, Japan, South Korea, Brazil, and Mexico
Revenue forecast, company ranking, competitive landscape, growth factors, and trends
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This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2014 to 2025. For the purpose of this study, Grand View Research has segmented the light duty vehicles market report on the basis of vehicle type, fuel type, transmission, drivetrain, and region:
Vehicle Type Outlook (Volume, Million Units; Revenue, USD Billion, 2014 - 2025)
Sports Utility Vehicle (SUV)
Fuel Type Outlook (Volume, Million Units; Revenue, USD Billion, 2014 - 2025)
Transmission Outlook (Volume, Million Units; Revenue, USD Billion, 2014 - 2025)
Drivetrain Outlook (Volume, Million Units; Revenue, USD Billion, 2014 - 2025)
Front-Wheel Drive (FWD)
Rear Wheel Drive (RWD)
Four Wheel Drive (4WD)
All-Wheel Drive (AWD)
Regional Outlook (Volume, Million Units; Revenue, USD Billion, 2014 - 2025)
Middle East & Africa
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The automotive & transportation industry is amongst the most exposed verticals to the ongoing COVID-19 outbreak and is currently amidst unprecedented uncertainty. COVID-19 is expected to have a significant impact on the supply chain and product demand in the automotive sector. The industry's concern has moved on from being centered on supply chain disruption from China to the overall slump in demand for automotive products. The demand for commercial vehicles is expected to plummet with the shutdown of all non-essential services. Furthermore, changes in consumer buying behavior owing to uncertainty surrounding the pandemic may have serious implications on the near future growth of the industry. Meanwhile, liquidity shortfall and cash crunch have already impacted the sales of fleet operators, which is further expected to widen over the next few months. We are continuously monitoring the COVID-19 pandemic, and assessing its impact on the growth of the automotive & transportation industry. The report will account for Covid19 as a key market contributor.
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