The global low speed vehicle market is characterized by the presence of many global, regional, and local vendors. The highly competitive rivalry in the global low speed vehicle market has led key players to focus on innovation. Leading vendors are investing heavily in R&D for newer vehicles that will help them outshine their competitors. The key strategies adopted by the players in the low speed vehicle market are new product developments, supply contracts, and expansions. Polaris Industries and Textron are two of the leading market players that have adopted these strategies to expand their businesses. For instance, in October 2017, Polaris introduced the intelligent off-road suspension, DYNAMIX Active Suspension, for its low-speed vehicles. In addition, in September 2017, Textron had a supply contract with the Real Club Valderrama, a golf club in Spain, to supply 40 units of E-Z-GO RXV ELiTE golf carts.
Intense competition, rapid advances in technology, frequent changes in government policies, and environmental regulations are key factors that confront market growth. The vendors compete based on cost, product quality, reliability, and aftermarket service. The global low speed vehicle manufacturers are constantly spending on huge amount over development of low speed vehicles in order to make them more efficient and cut down their cost.
The growth of the market players is dependent on the market conditions, government support, and industry development. Thus, the vendors should focus on expanding geographically and improving services. In 2018, Polaris, Textron, Toro, Yamaha, Deere and Kubota among others are the major companies in the market, which compete in terms of availability, quality, price, and technology. Although the international players are dominating the market, regional and foreign players with small market shares also have a presence. The international players may strengthen their presence worldwide through acquisitions during the forecast period. The increasing urbanization in the developing economies all over the globe, such as China and US, is generating immense opportunities for the manufacturers of the low-speed vehicles to satisfy the emerging needs of the economic mobility infrastructure.
The vendors with better technical and financial resources can develop innovative products that render the competitors' products, obsolete and non-competitive even before they are launched, or costs are recovered. Therefore, vendors have to develop new technologies and stay abreast of emerging technologies that could affect the continuing competitiveness of their product lines in the market. The competitive environment in the market is likely to intensify further due to increase in product/service extensions, technological innovations, and M&A.
Development Date
Name of the company
Description
June 2016
Polaris Industries
Polaris Industries Inc. announced the update of its 2016 lineup of GEM electric low-speed vehicles. The vehicles are incorporated with improved ergonomics, ride, and range, as well as more comfort and safety features.
August 2018
Textron Inc.
Textron Inc. introduced a new addition to its E-Z-GO lineup, the E-Z-GO Express 4x4. The new vehicle features a 72-volt AC electric drivetrain.
January 2018
Yamaha Golf Car
Yamaha Golf-Cars showcased the next generation of its gas and electric golf cars, Drive2, at the PGA Merchandise Show Demo Day.
January 2017
Kubota Corporation
Kubota Corporation established a new R&D center in its Sakai Plant, Japan. With an investment of around USD 32.98 million, the center will conduct R&D activities on combine harvesters, utility vehicles, and ride on mowers.
Development Date
Name of the company
Description
March 2017
Textron
Textron announced the acquisition of Arctic Cat Inc., one of the leading companies in the recreational vehicle industry. The Arctic Cat will operate as a subsidiary of Textron Specialized Vehicles Inc. and will manufacture vehicles and equipment for a wide range of industries
February 2016
Textron
The company announced its plans to acquire a manufacturing facility set on more than 235 acres of land which was currently owned by Procter and Gamble. The company expected to utilize the new facility, to expand its operations in Augusta
Development Date
Name of the company
Description
March 2018
Taylor-Dunn
Taylor-Dunn Manufacturing Company expanded its manufacturing facilities for its Polaris GEM product line. The facility will be manufacturing the majority of its electric vehicles and will be the engineering and production center for its Polaris electric vehicle line.
March 2018
Club Car
Club Car, LLC established a new distribution center in Columbia County, the US. This distribution center has expanded its presence in the US and supplies most of its products to the domestic market.
May 2017
American LandMaster
American Landmaster announced the expansion of its operations in Indiana, the US. It invested around USD 4 million to lease and equip a 112,000 sq. ft. space.
The Threat of New Entrants
The low speed vehicle industry has various barriers to entry. For example, manufacturing low-speed vehicles requires high investments in production lines, machinery, and technology. Besides that, expertise in the automotive business is needed to invest efficiently. Since technology costs are still very high, the margins on low speed vehicles are reduced. These barriers result in high fixed costs once investments have been made, which requires additional investment capital to secure a market share initially, especially for new competitors. Because of that, the growth in the low speed vehicle industry will come from conventional automotive manufacturers, who already know the processes and the needed infrastructure. Furthermore, the government regulation regarding carbon emission is also affecting the market. Thus, the threat of new entrants is low.
Bargaining Power of Suppliers
The raw material and component suppliers are considered suppliers in the low speed vehicle market. The materials and components include steel, plastic, batteries, electronic circuits, and sensors. Many suppliers in the market are providing these components at competitive prices, giving the manufacturers a wide variety of options. Furthermore, presence of considerable number of suppliers in the market along with low switching cost in automotive industry restricts the bargaining power of the suppliers. Hence, the bargaining power of suppliers is low.
Threat of Substitutes
The threat of substitutes consists of products that fulfill the same need but with various complications and drawbacks. Various alternatives are on the market; they would likely be substituted by other small vehicles. Hence, the threat of substitutes is moderate.
Bargaining Power of Buyers
When a strong group of consumers is present within the market, it will considerably impact a company's product and selling decisions. Buyers have the choice; brand loyalty can help mitigate buyers' power. Increasing environmental awareness and the benefit of long-term savings on fuel costs motivates more customers to buy low-speed vehicles. However, due to strong competition and substitution in the industry, the power is with the buyers. Another factor that increases the power of the buyers is the limited switching costs. Switching from one model to another has little to no cost for the customer. Therefore, buyers tend to choose their model based on quality, price, and service. An answer to mitigating the power of buyers is better customer service and a stronger focus on brand loyalty. However, the buyers dictate the specification and type of advertising opportunities required, which makes their bargaining power moderate.
Intensity of Rivalry
There is intense competition among the existing players in the market, with the vendors investing heavily and using extensive research and development to develop high-quality, modern, cost-effective, low speed vehicles, thus resulting in the rivalry in the market being moderate.
