The oracle of Twickenham

From the June 2018 issue.

Gary Beecroft is one of the few automotive analysts in the world specialising in the transport equipment market – giving his work an almost unimpeachable aura of authority in an otherwise highly volatile market.

Gary Beecroft is a rare breed in the heavy vehicle world. Focusing solely on trailer manufacturing, the ex-Standard & Poor’s analyst is one of the most sought-after experts in the field of heavy vehicle market analytics – and yet most of his clientele only know him through the clear-cut, no-nonsense market commentary circulated under the CLEAR International label he founded in 2000.
Public appearances are sporadic at best, and his last keynote at the Global Heavy Vehicle Leaders Summit in Melbourne, Australia, already lies two years in the past. In an effort to explore just how Beecroft manages to continually predict the unpredictable, Global Trailer now tracked down the industry’s mysterious sales oracle in suburban London.

Q: You are one of the few analysts in the world focusing full-time on the European trailer market. What drew you to the industry in the first place?
A: During the 1990s I worked for an economic consultancy in London, forecasting demand for specific types of vehicles, systems, components and technologies for a range of vehicle and component manufacturers. One day a German bank contacted me and asked if we could forecast future demand for commercial trailers – something no–one in Europe had ever done before. A few years on, a component manufacturer approached me with the same request, focusing on the largest markets in Western Europe. What was meant to be a one off became a regular service, albeit for a single client.

Q: So when did the trailer sales forecasting really take off?
A: I started my own company in the 2000s, focusing on automotive consulting at first – essentially my old area of expertise. In 2002-03, when many European economies tipped into recession, that project hit the first roadblock, so I remembered those trailer assignments and started pitching a regular trailer market forecast to the trailer building industry. It transpired that there was considerable interest – and the rest is history. Since the launch of our regular trailer forecast in 2003, our European coverage has expanded to cover 30 countries – and the depth and detail of the analysis has since increased on a continuous basis. We have also launched a global forecast though at the moment it’s less detailed than the European product.

Q: In a world dominated by large-scale consultancies, how have you managed to stay relevant and dominate the industry the way you do?
A: I sometimes work with global management consultancies on a project basis – there’s no competition here. CLEAR International could not take on the type of projects these companies work on, which are often acquisitions-related. Likewise, it would not make economic sense for these firms to duplicate the analysis and forecasts undertaken by CLEAR International. And then there’s the glamour aspect: The truck industry is less glamorous than the car market, but at least though most business people recognise it as an essential component of modern life. There’s zero glamour in trailer consulting, though. The trailer industry is treated with indifference. Maybe that’s the key.

Q: What’s your personal background? How does one qualify for a role that is no doubt experiencing intense scrutiny by key players in the industry?
A: I was fairly obsessed with cars as a kid. At school I rebuilt a go-cart that had been lying around in the technical department forever. In a few weeks my friends and I wore out a set of tyres that had lasted a decade prior to that. Unsurprisingly I went on to study mechanical engineering at Edinburgh University, then did a Masters Degree in automotive engineering at Cranfield. After a brief spell programming Glaswegian traffic lights and then designing radars I moved to Rover Cars in Oxford where the Mini is now built. While I was there, I got an interview with Patrick Head of the Williams F1 team, but alas finished second in that process so instead moved to Ford in Germany to work on the Mondeo program. Subsequently I went back to Cranfield University to do an MBA, which is how I came to work for an economic consultancy, where they needed someone that understood both the business and engineering side of the vehicle industry.

Q: With that in mind, how do you go about your work? In your reports, you are typically looking up to five years into the future – what’s your process here? Is it a trade secret or could you give us some insights into your day to day?
A: It would be easy to say when the economy is strong, sales go up and vice versa. But while it is possible to correlate trailer sales with economic data, it’s not quite so straightforward – many other factors have to be taken into account, too. If you look at the period from 2006 to 2016, for example, it was only twice that annual trailer sales changed by less than five per cent. However, most people are comfortable with forecasting that the market will be flat or go up or down by two per cent in line with the economy. The data, however, shows that in more than half of those eleven years the market changed by a double-digit percentage you can’t explain with the economy alone.

Q: So how would you describe the European trailer market as a whole? Is it a predictable beast compared to the rest of the world?
A: The trailer market is more volatile than the truck market, which in turn is more volatile than the light vehicle market. At least it’s less prone to disruption by politically driven events than others in the world.

Q: You are typically differentiating between East and West, the old and the new Europe. What are the key differences between the two?
A: The markets are fundamentally different. Western Europe is a mature market, but Eastern Europe is still a growth market on the whole. Some eastern markets have developed so fast that trailer demand is unlikely to grow quickly in the future, whereas others have years of growth potential ahead.

Q: In how far have the two markets evolved since the GFC and subsequent Eurozone crisis? Is everything back to normal now, or have there been some more fundamental changes?
A: The West European trailer market dropped by over 50 per cent in 2009, and the East European market by slightly more. By comparison, the drops in the car and truck markets were rather modest. As such, the period from 2009 to 2013 was fairly dire for the trailer industry, and with a few exceptions the recovery was very slow. Naturally that wasn’t helped by the Eurozone crisis and the concern over the viability of some banks. It wasn’t until 2014 that the market really started to move again, and in 2017 demand for new trailers in Western Europe was the third highest on record. The recovery in the large and important markets of France, Italy and Spain was especially tardy.

Q: Why is that?
A: Transport companies had to be run more efficiently to survive in the wake of the GFC, which means they didn’t need order quite as many vehicles as they used to. That mindset lingered for quote some time. One reason is that demand for road transport in Western Europe has not yet recovered to the levels seen before the 2009, so it’s arguably justified.

Q: You’ve been predicting a market drop in 2018 for a long-time. Are we still on a track for a course correction after a few strong years? If so, where will it hit the worst?
A: Given that the economic outlook for Europe continues to improve, why is the trailer market forecast weaker in 2018-19? The catch up demand that has been pushing the market is now over, and the trailer parc is fully replenished. Furthermore, it’s now nine years since the decimation of the trailer market in 2009, and the market has never gone ten years without a slowdown. All these factors point to a fall in demand for new trailers. Fortunately for the industry, the fall will be relatively modest and short-lived.

Q: When do think it will hit us?
A: I think this effect will be seen in the second half of 2018. This is the most likely scenario. But there is a chance that the inevitable will be delayed by twelve months and the effects won’t be seen until 2019.

Q: You don’t seem to touch in brand specifics too much, but is there a European OEM that you’ve been impressed by of late, judging by economic performance?
A: To say many OEMs have done quite well would be the diplomatic way of assessing the market. One might say the true movers and shakers are in “division two” of the trailer league – think SDC, Wielton and Tirsan. Other companies that are interesting are the specialist manufacturers who have read Michael Porter’s strategy books a while ago.

Q: Do you also observe the international market as a means of comparison? Or is a European view sufficient?
A: The European market is completely different from those in the Americas, Asia or Africa and the Middle East. In countries where there is a lot of state involvement in transport it is not even possible to say that they are all genuine transport and vehicle markets. It’s worth remembering that the largest global trailer manufacturer is CIMC of China.

Fast Fact
The first two clients Gary Beecroft secured after founding CLEAR International were Rolls Royce Motors and Porsche – not quite the trailer manufacturing audience of today. “I came within a hair’s breadth of advising on the acquisition of Lamborghini before Audi got its foot in the door just before my client,” he recalls.

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