Specialty Vehicle Market

A specialty vehicle is any custom-built application-oriented vehicle designed to serve a professional purpose. They can be designed from scratch or modified from an existing vehicle. Ambulances, fire trucks, garbage trucks, hearses, limousines, school buses, street sweepers, vacuum trucks, wreckers, and other similar limited-purpose vehicles are specialty vehicles.

The specialty vehicles market globally is estimated to grow from USD 105 billion in 2022 to reach USD 123 billion by 2027, at a CAGR of 3.2%. The market for specialty vehicles is expanding primarily due to rising government expenditure and spending on healthcare, infrastructure, recreational facilities, and many more. The number of global infrastructures development projects grew in 2020, despite the COVID-19 pandemic. According to Refinitiv, 2,551 infrastructure projects were announced between 1st January and 31st December 2020, with a total value of USD 739 billion. Of this total value, North America held the highest value of announced projects - $167bn with 419 projects, followed by Western Europe $136bn for 604 projects, which is 5.5% more than the projects announced in 2019. Growing demand for application-based customization or end-use of the vehicle for different operations across the segments is further driving the popularity of specialty vehicles.

Market Dynamics

DRIVER: Growing development of mobile clinics, airport terminal expansions, and e-commerce transportation, etc., are driving the demand for specialty vehicles

The growth of the e-commerce industry and the subsequent rise in demand for better fleet and logistics management are propelling the demand for specialty vehicles. For instance, According to Tata Motors, India's e-commerce sector is expected to grow at 35-40% over the next four to five years. The sector is expected to account for 8-9% of specialty fleet vehicle sales, with increasing avenues of mobile clinics, specialized ambulances, integrated transportation, and airport operation like catering trucks, De-icing vehicles, apron buses, etc. The e-commerce industry relies heavily on logistics to meet timely deliveries. As a result, the logistics industry, like the e-commerce industry, is rapidly expanding in terms of specialty vehicle requirements. These factors are prudent for propelling the sector's growth opportunities.

OPPORTUNITIES: Use of Artificial intelligence (AI) in specialty vehicles for assistance in decision-making, fleet management, and supplies to become more efficient and streamlined

AI and other advanced technologies are increasingly being used to transform fleets. Fleet managers have realized that artificial intelligence (AI) assists them in decision-making rather than replacing them. Thus, fleet managers and suppliers are rapidly adopting new technologies to become more efficient and streamlined. Customers are looking for more advanced and versatile technology that has the potential to improve vehicle performance efficiency. AI-enabled specialty vehicles enable real-time monitoring, predictive repair and maintenance, and increased driver safety.

CHALLENGES: Keeping up with the changing demand and disruption in the supply chain are the major challenge for specialty vehicles

Keeping up with changing demand is one of the most difficult challenges for manufacturers in the specialty vehicle sector. Automobile and specialty vehicle manufacturers are constantly working to improve manufacturing efficiency and technological upgradation. Today's industrial demands include self-monitoring capabilities for preventative maintenance and servicing and the ability to support multi-mode and Just in Time manufacturing. Manufacturers must focus on lowering costs and providing appealing services due to new service model requirements and rising material and production prices. Customers' purchasing habits in the specialty vehicle industry are changing dramatically, particularly regarding product customization. As the demand for customization grows, OEMs are expected to face more options and complexity in specialty vehicles.

CHALLENGES: Varied customization needs from various industry applications

Specialty vehicle manufacturers face restrictions to cater to demand from various end-users, from hospital services to safe logistics delivery. It becomes difficult to address the customers' customization needs based on fast-changing requirements. Disruptions in the availability of components for manufacturing specialty vehicles due to supply chain bottlenecks are also major impediments to realizing the sector's true potential.

Key Market Players

The specialty vehicles market is dominated by major players such as Mercedes-Benz Group AG (Germany), LDV Inc. (US), Force Motors Limited (India), Matthews Specialty Vehicles Inc. (US), Specialty Vehicles Inc. (US), REV Group (US), Volvo Group (Sweden), Oshkosh Corporation (US), Alamo Group (US), and Federal Signal Corporation (US). These companies have strong distribution networks at a global level and offer an extensive product range. These companies adopt strategies such as new product developments, collaborations, and contracts & agreements to sustain their market position.

Recent Developments

• In October 2022, Phoenix Motor Inc., a leader in the production of all-electric medium-duty vehicles, and Pegasus Specialty Vehicles announced a strategic partnership to jointly develop Type A electric school buses for the North American market. The agreement calls for a minimum of 300 Type A school buses to be built over the next three years, with Phoenix supplying the electric drivetrain chassis and Pegasus supplying the final vehicle assembly, which includes the body and cab. Phoenix and Pegasus will begin commercial sales and marketing activities in the United States to promote Phoenix-electrified Pegasus Orion Type A School Buses.
• In April 2022, Volvo announced that all its vehicle models would be able to receive software updates via the internet (OTA). The most recent Volvo vehicles to receive this feature are the XC90 large SUV, S60 sedan, and V60 Cross Country wagon. They'll also get Android Automotive's infotainment system.
• In August 2021, Wrightspeed and Matthews Specialty Vehicles announced a partnership to develop, convert, and deliver battery-powered and range-extended electric buses, trucks, and specialty vehicles with industry-leading performance, efficiency, and total cost of ownership (TCO). Allen Global Enterprises (AGE) has received its first order for developing and producing 30 tactical Mobile Detection Systems (MDS) vehicles, which the company is currently completing. Wrightspeed and Matthews' strategic partnership aims to produce 5,000 vehicles over the next five years.
• In April 2021, Mercedes-Benz announced that its ambulance vehicles based on the eSprinter would be electrified. Mercedes-Benz Vans and its partner "Ambulanz Mobile GmbH & Co. KG" from Schönebeck in Saxony-Anhalt used the eSprinter as the basis for its first fully electric vehicle for duties in the health sector, with a range of 120 km and a top speed of up to 120 km/h. The van has begun operational testing with the Christian aid organization "Johanniter-Unfall-Hilfe." As part of this process, Ambulanz Mobile GmbH will work closely with the aid organization to incorporate feedback from daily operations into the vehicle's future development.
• In February 2021, Oshkosh Corporation announced a planned investment in Microvast. This relationship strengthens Oshkosh's existing technology strategy, which aims to increase the development of advanced products that meet customers' current and future needs. In addition, Oshkosh and Microvast signed a joint development agreement emphasizing future battery collaboration and integration.