Daimler’s road to growth

The global economy recovered in 2010, although the pace of the positive development varied greatly from region to region. The economic upturn led to a significant increase in demand for transport services, and thus for commercial vehicles. Therefore, German company Daimler announced to pursue regional growth with a focus on emerging markets.

Whereas the European truck market grew moderately in 2010, the truck market in Brazil expanded by more than 50 percent compared to the prior year. Demand for trucks in North America and Japan increased substantially. Daimler Trucks profited considerably from the worldwide recovery of the commercial vehicle market in 2010.

Daimler Trucks sold 355,263 vehicles around the world in 2010, an increase of 37 percent on the prior year. These sales generated revenues of €24.024 billion ($34.15 billion; +31 percent) for the division, enabling it to successfully defend its position as the world’s leading manufacturer of medium-duty and heavy-duty trucks.

“When the economy grows, the need for transport services grows along with it. We are among the top three manufacturers in terms of market share in all of our core markets, and all of our business units have returned to profitability,” said Andreas Renschler, member of the Daimler AG Board of Management and responsible for Daimler Trucks and Daimler Buses.

The focus in 2011 and beyond will be on regional growth. “Turkey is a core market for Mercedes-Benz trucks and a true tiger nation,” said Renschler. “The country has already reached 15th place in the rankings of the world’s largest economies, and for us it’s number three in terms of Mercedes-Benz truck sales.”

Brazil is the most important market for Mercedes-Benz trucks. In an effort to meet the growing demand for heavy-duty long-haul trucks in both markets, Mercedes-Benz began producing the Actros in Aksaray, Turkey, in December 2010, and will also start building the same model in Juiz de Fora, Brazil, in 2012. This expansion of the production network will increase the flexibility and competitiveness of Mercedes-Benz trucks.

Russia is the biggest growth market in Europe at the moment — and Fuso Kamaz Trucks Rus has been successfully manufacturing and marketing the Fuso Canter there since June 2010. Roughly 800 of these light trucks were sold in Russia last year. In addition, Mercedes-Benz Trucks Vostok officially opened a new plant in Chelny in mid-March 2011, and the first Mercedes-Benz Actros models are now being assembled there.
In February 2011, Daimler Trucks’ fifth brand — BharatBenz — was unveiled in India. Over the next five years Daimler Trucks will invest a total of approximately €700 million in India, where the division will also begin manufacturing trucks of 6–49 tons GVW at the new plant in Chennai in 2012.

A major milestone was achieved in China last year, when a new joint venture agreement was signed with Foton. “We’re very confident that we will receive the business license for the joint venture in summer 2011,” said Renschler. “We’ve also got the right partner here with Foton, which is already building 100,000 trucks. A second plant is now under construction. This means that our joint venture will in the future have a total annual production capacity of 160,000 trucks.”

In addition to its operations in its traditional markets and in the RIC countries, Daimler Trucks is also focusing on the new growth markets of the future.
“We’ve identified ten Future Focus Markets for Daimler Trucks,” Renschler explained. We essentially based our selections on three criteria: overall economic outlook, local truck market volume, and initial business conditions in the respective markets.” The ten Future Focus Markets are: Algeria, Argentina, Colombia, Malaysia, South Korea, Syria, Thailand, Ukraine, Venezuela, and Vietnam.

Regardless of the prevailing economic situation, Daimler Trucks consistently invests in new products and research and development. In fact, the division will be renewing virtually its entire product portfolio over the next 24 months. The focus here will be on further improving fuel consumption, safety, and sustainability, as well as the expansion of aftersales operations and customer-oriented services.

Daimler Trucks’ global development network, as well as the division’s decades of experience with cross-brand projects, have led to the creation of a modular system that generates synergies while still enabling the development of products precisely tailored to specific customers and market requirements.

Daimler Trucks has set itself the goal of achieving an 8 percent return on sales across the business cycle starting in 2013. Renschler explained how the division will get there: “We’ve established a clear roadmap in the form of our ‘Regional Champion Approach,’ reducing fixed costs and thus the break-even point, and substantially investing in new products and technologies.”

As part of the Regional Champion approach, all of the division’s business units plan to either defend or take over the top position in their respective markets.
In addition, systematic cost management measures, further improvements at all units, exploitation of synergy potentials, the launch of new product generations, penetration into new growth markets, and continued success in traditional markets will all contribute to the achievement of Daimler Trucks’ goals, Renschler said.

Leave a Reply

Send this to a friend