SCI Verkehr expects the COVID 19 crisis to lead to increased competitive pressure between providers in the rail vehicle maintenance sector over the next five years
SCI Verkehr expects the COVID 19 crisis to lead to increased competitive pressure between providers in the rail vehicle maintenance sector over the next five years: On the one hand, due to declining new purchases, more manufacturers are pushing into the after-sales market, as they can sell fewer new vehicles. On the other hand, due to the lack of new rolling stock, the railways will have to modernise more old rolling stock and will provide these services in-house for the benefit of their own workshop capacity utilisation. Currently, the railways themselves account for more than three quarters of the market share in the maintenance business. Depending on the country and transport sector, the share of manufacturers in the after-sales market is now as high as 20%, while independent maintenance providers only provide a small share of up to 5%.
Due to the COVID-19 crisis and the worsened economic situation, it is expected that large operators will tend to insource maintenance services in the coming years. In this way, they can optimise the utilisation of their own workshops and employees. Manufacturers who sell fewer new vehicles due to investment stops will also make more intensive efforts to win maintenance contracts. This increases the competitive pressure in the market in general and poses challenges in particular for independent maintenance providers.
In 2019, the total market volume for the European rail vehicle maintenance market amounted to approximately €19 billion. SCI Verkehr forecasts an increase in turnover to 22 billion euros by 2024. The main drivers for this growth are maintenance work on high-speed vehicles and electric railcars.
In the crisis year 2020, it was primarily the operational maintenance that initially suffered setbacks, as the thinned-out timetables significantly reduced the mileage of the vehicles. In the medium term, however, orders in the maintenance market are expected to increase again. This is because the more difficult overall economic situation is leading to restrained investment in new purchases. Instead of decommissioning, older rolling stock will then have to be increasingly modernised. In addition, diesel railcars and diesel locomotives, some of which are very extensively converted and equipped with alternative drive systems, will have to be modernised. Furhtermore railways and leasing companies are planning major retrofitting projects on freight wagons to install innovative technologies. Decarbonisation strategies also lead overall to a shift of transport to the railways, thus generating growth in the transport market and, indirectly, a positive effect in the maintenance sector.
With regard to the different transport sectors, passenger transport in 2020 saw a larger slump in freight transport, but on the other hand, passenger transport in Europe is also supported by more state subsidies. This will better compensate for the loss of passenger revenues in the passenger vehicle maintenance sector. However, this is not the case at city and local level, where there is a lack of public funding. In the freight transport sector, the large number of private providers is facing challenges in the face of the crisis, but can at least expect a faster recovery of transport volumes and a related higher demand for maintenance than the maintenance providers in passenger transport.
The new market report "Rail vehicle maintenance - Market trends in the after-sales market in Europe" will be available in English in the SCI Shop from November 26th, 2020. A data annex in Excel format is also available for the study, which presents all the figures contained in the study in a transparent and clear manner.
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