Japanese OEMs: Electrification of Small-lot Delivery in Asia

Demand for purchasing goods via e-commerce platforms such as Amazon and the accompanying small-lot delivery services are expanding year by year. Similar trends can be seen in India, ASEAN and China. For such last-mile delivery, various vehicles such as vans, trucks, three wheelers, motorcycles, and bicycles are used because the required delivery method differs from city to city. Looking at the van market in India and Indonesia, Asia’s second and third most populous nations, India maintained a market size of over 100,000 units, exceeding 200,000 units at its peak in 2018 during the six years from 2016 to 2021. During the same period, Indonesia’s annual van sales exceeded 40,000 units except in 2020 when corona wreaked havoc in the country. Looking at the top van models, India’s van market is dominated by Maruti Suzuki, while the leading brands in Indonesia are Daihatsu, Mitsubishi and Toyota, indicating a strong presence of Japanese brands in both countries.

On the other hand, in Asia, including developed countries such as Japan and South Korea, efforts to combat global warming are heating up, and as an ESG measure, shipping companies are increasingly requesting logistics companies to use low-GHG solutions. In some countries, the national governments have chosen the electrification of delivery operations as a priority area in their environmental strategy with a focus on last-mile transport. In the Electric Vehicle Industry Development Act enacted by the Philippines in May 2022, the government requires government agencies and companies in specific industries to use electric vehicles for a certain percentage of their vehicle fleet. One of these industries is the logistics industry. In general, vehicles for delivery use have a limited daily mileage and travel route, so it is often sufficient to install a charging infrastructure only in the place that will be the distribution hub. Purchase subsidies are an effective measure to promote the spread of electric vehicles and since the number of delivery vehicles is far less compared to privately-owned passenger vehicles, it is easy for governments to introduce purchase subsidies for the logistics industry. For this reason, it is highly possible that the electrification of logistics vehicles will progress in the near future in Asia.