BharatBenz trucks 1 year in India, Marc Llistosella speaks
Daimler commercial vehicle’s mark a strong first year in India with BharatBenz trucks. Gaining a stronghold here, a great deal has been achieved with more to come. Progress comes with product portfolio, and dealership network expansion. The advancement made in India is in tandem with the larger ‘Asia Business Model’.
Despite a difficult economic backdrop, BharatBenz progressed to 4th place in Indiaâs ranking of new truck registrations in 2013 Q2. 5,000+ BharatBenz trucks have rolled off the assembly line. 17 models are scheduled to become available by 2014, of which 9 models have been launched to date. DICV uses and promotes synergies of the global Daimler Trucks network in the Asia Business Model framework here. Under Daimler Trucks Asia, 2 subsidiaries, Mitsubishi Fuso Truck and Bus Corporation (MFTBC) and DICV strive to better their stand in growth markets. In May 2013, FUSO trucks for export markets in Asia and Africa rolled off the Chennai assembly plant.
âIn as little as twelve months, we have gained a foothold on the Indian market and lived up to our brand promise âPower Aheadââ, sums up Marc Llistosella, Managing Director and CEO of DICV, on the occasion of a Chennai-located event celebrating the first market anniversary. âWe will work just as powerfully in the upcoming months to further expand our product portfolio as well as our dealership network.â
Daimler Trucks strategy: Achieving growth and economies of scale while consistently focusing on regional market requirements
Favorable development of incoming orders since the beginning of the year (+23 percent)
Extra shifts at WĂ¶rth truck plant until the end of 2013
Full-year forecast for 2013 reaffirmed
Three platforms and modular systems serve as the key strategic elements of the divisionâs future success
Sales structure Mercedes-Benz Trucks in Europe to be strengthened
At an investor and analyst conference in WĂ¶rth, where the division has its largest truck plant, Daimler Trucks today described its divisional strategy and commented on the short, medium, and long-term market and business prospects.
On track to achieve the targets for 2013
The division has reaffirmed its forecast for 2013, expecting sales to be higher than in 2012 and EBIT from ongoing business to be at the same magnitude as last year. However, the EBIT will be higher in the second half of the year than it was in the first six months. This increase is due to rising sales in all of the core regions, higher profit contributions resulting from the Daimler Trucks #1 (DT#1) growth and efficiency program and the tendency toward stabilization in key markets. In 2012 Daimler Trucks sold around 462,000 units and generated about âŹ1.7 billion of EBIT from revenues of approximately âŹ31.4 billion. In the first half of 2013, sales amounted to 225,200 units, revenues to âŹ15.0 billion, and EBIT to âŹ550 million.
âOur incoming orders show a positive development. All together the second half of the year will be stronger than the first six months, so the whole year is developing as we were expectingâ said Dr. Wolfgang Bernhard, the Daimler Board of Management member with responsibility for Trucks and Buses.
Incoming orders almost a fourth higher than last year
From January through the end of August, incoming orders were 23 percent higher than in the same period of last year, with all regions contributing to this increase. At the same time, the book-to-bill ratio (the relationship between incoming orders and sales) rose to 112 percent. Due to the favorable development of recent weeks, staff at the divisionâs largest plant, in WĂ¶rth, will work 15 additional shifts in the second half of the year.
Through the end of August, sales at Daimler Trucks amounted to about 305,000 units, a figure that was practically as high as last year (Jan.-Aug. 2012: 309,000 units). The challenging situation in Asia, which is in particular characterized by tough price competition, was almost completely offset by a recovery in Brazil.
Thanks to the high level of acceptance of the brands and products, the division was able to increase its market share in the main core regions. Driven by market leading products like the Freightliner Cascadia Evolution in NAFTA, the divisionâs share in the Class 6 to 8 section increased by 6.6 percentage points through the end of July, reaching an all-time high of 39.8 percent in a market that contracted by five percent as a whole. In Europe (EU29), the market for medium-duty and heavy-duty trucks declined by 9 percent, while the divisionâs market share rose by 0.5 percentage points to 22.7 percent. In the German market, which contracted by 11 percent, the divisionâs share increased by 1.2 percentage points to 39.7 percent. However, market share dropped in the hotly contested markets of Brazil and Japan. With a market share of 24.2 percent (2012: 26.2 percent), Mercedes-Benz ranked second in Brazil. In Japan, FUSO came in third with a share of 20.2 percent (2012: 21.0 percent) of the total truck market.
This yearâs expected increase in sales is being supported by the Daimler Trucks #1 efficiency and growth program, which underscores the divisionâs aim to permanently play a leading role when it comes to sales and profitability. With the help of DT#1, the division aims to achieve a profit contribution of âŹ1.6 billion by the end of 2014. Daimler Trucks wants to reach 30 percent of the total by the end of 2013. Around 30 percent of this volume had been achieved by the middle of the year. Further momentum should build up in the second half of the year.
Three market regions, three platforms, three weight categories
The Daimler Trucks strategy continues to focus on maintaining a global footprint and rigorously aligning the divisionâs business system with the market and with customer requirements in the key sales regions. The main element consists of three platforms and corresponding modular systems, which will enable the worldâs leading global commercial vehicle manufacturer to achieve long-term growth while at the same time maximizing its synergies and economies of scale.
âThree platforms, three market regions, three weight categories â this triple strategy will enable us to offer optimally tailored trucks to every customer in the world. We are doing everything we can to achieve our goals on the basis of our innovative capabilities, global footprint, strong brands, and platform and module strategyâ, Bernhard said.
The foundation that will enable Daimler Trucks to achieve its self-made targets consists of the divisionâs technologically leading customized products, strong and regionally relevant brands, global footprint, and growing economies of scale resulting from the platform and module strategy. The pivotal focus is on the comprehensive product range, which encompasses all three weight categories for the three global commercial vehicle regions: the triad markets (Europe/North America/Japan), the follower markets (e.g. Brazil, China Russia), and the developer markets (e.g. India â but Africa as well). For each of these regions, Daimler Trucks can use its latest models and components as well as its proven products. This means offering cutting-edge technologies in the triad markets, well-established technologies such as the proven Actros and its engine in the follower markets, and a third line of products for the developer markets. The latter consist of technologically simpler, robust vehicles such as those being currently produced at the plant in Chennai, India. On the whole, customers will benefit from this strategy of ensuring the optimal availability of products and technologies from Daimler Trucksâ global portfolio.
Optimized sales structures to help the division achieve its goals
The recently announced strengthening of the sales structures of the individual Daimler divisions will also help Mercedes-Benz Trucks accommodate itself more effectively to its customersâ needs in Europe. For example, it will result in the integration of commercial vehicle sales with the aftersales business under the lead of Mercedes-Benz Trucks.
âOptimizing our sales structure will enable us to more directly control our commercial vehicle business in the future,â said Bernhard. âWe will also be much closer to the customers and thus become more effective and responsive.â
Medium-term targets reaffirmed
Daimler Trucks continues to strive to achieve its medium-term targets of attaining an 8 percent return on sales across the business cycle and of selling more than 500,000 units in 2015 and 700,000 units in 2020.
Long-term growth in truck demand
Although conditions remain difficult and the business environment is very volatile, the truck industry is set to grow over the medium and long term. The OECD estimates that while the global economy will grow from $72 trillion in 2012 to $93 trillion in 2020, the transport volume will increase from 4.8 trillion ton-kilometers to around 6 trillion ton-kilometers during the same period. As a result, global sales of medium-duty and heavy-duty trucks will probably rise from around 2.5 million units to about 3.7 million units by the end of the decade.
âWe expect relatively moderate growth in the triad until 2020. The biggest increase will be in follower markets such as Brazil, Russia, and China, followed by developer markets such as India. We align our strategy so that we can optimally exploit these market developments”, said Bernhard.
Europe – Entire product range already Euro VI-compliant
With regard to the individual market regions, Mercedes-Benz Trucks has now concluded its product offensive in Europe. With the new Actros long-haul truck, the Antos heavy-duty truck for distribution transportation, the construction site specialist Arocs, and the new Atego for medium-duty distribution transportation, Mercedes-Benz Trucks has completely updated the brandâs medium-duty and heavy-duty vehicle lineup. In addition, all of the models already comply with the Euro VI emissions limit, well before the new standard goes into effect at the beginning of 2014. Moreover, the vehicles are more fuel-efficient than their predecessors, despite the fact that design elements would make one expect an increase in fuel consumption.
Around half of new Mercedes-Benz trucks are currently being ordered as Euro VI-compliant models, and three out of four new vehicles ordered in Germany already meet the new emissions standard. Customers recognize the added value that the new models provide with regard to the total cost of ownership (TCO). To meet the strong demand for the new Mercedes-Benz truck products, employees are working extra shifts at Mercedes-Benzâ leading truck plant in WĂ¶rth this quarter, and this will also be necessary in the fourth quarter.
However, Daimler Trucks doesnât only offer first-rate products in Europe; the all-new Freightliner Cascadia Evolution is also in great demand in NAFTA. Like the other Daimler trucks, this model is a top performer when it comes to saving fuel, boasting seven percent greater fuel economy than its predecessor. More than 15,000 fixed orders have been placed for the Cascadia Evolution to date. TCO is playing an increasingly important role for truck purchasers in NAFTA as well.
India â rollout of BharatBenz models continues
The rollout of the BharatBenz models is in full swing in India. In total, 17 models are scheduled to become available by 2014. Nine models have been launched to date, and the 5,000th BharatBenz truck recently left the plant in Chennai. Despite facing a difficult market environment, BharatBenz was able to go from a standing start to take fourth place in Indiaâs ranking of new truck registrations in the second quarter.
Daimler Trucks Asia exploits the synergy potential of MFTBC and DICV
In order to exploit additional growth opportunities in new and established markets, Daimler Trucks has created an integrated business model for Asia and consolidated it at Daimler Trucks Asia. The increased integration of Mitsubishi Fuso Truck and Bus Corp. (MFTBC) and Daimler India Commercial Vehicles (DICV) aims to exploit growth and synergy potential in procurement and production as well as in sales. As part of the Asia Business Model, the company has begun to manufacture FUSO trucks at the plant in Chennai, India. These FUSO vehicles are destined for export to markets in Asia and Africa.