Five months after his appointment as Hino Australia Vice President – Brand and Franchise Development, Richard Emery, is enjoying the transition and challenges of the highly competitive trucking sector after more than three decades working in the passenger car industry for the likes of Nissan, Mercedes-Benz, Audi and Land Rover.
PRIME MOVER: Given your background and extensive knowledge in the automotive segment, what kind of mindset adaptation has been required of you moving into the commercial vehicle space?
RICHARD EMERY: The parallels are stronger than I had anticipated. What I’ve found is the building blocks for operating our business, working with dealers and talking to customers are the same building blocks across the automotive industry. However, the delivery timing and priority are clearly in a different order with a different emphasis.
PM: What kind of adjustment have you undergone to date?
RE: In the passenger car business, particularly in the current context, you can potentially massage customers into your product offering and stock position. In the truck business, it’s quite different — the applications and the specific purposes that trucks are used for don’t give you the same flexibility. When it gets into specific products, customer circumstances and applications, you can’t convince a customer to buy something that doesn’t fit their application just because that happens to be the one that you’ve got in stock. That’s just not how the truck industry works. It’s very specific to the application and to the customer need. There’s always an element of this in any auto business, but in trucks it becomes quite amplified. This flows through to conversations we have with Hino in Japan and elevating those customer-focus specific requirements further up the chain into our build program. It’s a weekly, if not a daily, conversation between us and Hino in Japan to ensure we get the supply mix and volume right. It’s a real balancing act.
PM: What do you hope your background allows you to bring to the trucking industry?
RE: In the truck business, at the moment, there’s a danger of demand outstripping supply meaning that the edge can come off a little bit in terms of the actions that you take or the business you chase down. You need to prioritise and focus on key opportunities. I suppose that ‘edge’ or sense of urgency comes from my car background. On that front, I’ve had to slowdown a few times as I’m always ready to rock and roll. Things can take longer in the truck business for all sorts of reasons at the moment, which has been exacerbated by, not just the supply chain out of Japan, but also body builders’ capacity and capability. The whole supply stream of the truck industry is under a unique set of pressures. It’s hard to ascertain whether I’ve got used to the truck business because I don’t think there’s a ‘regular’ truck business right now. There’s something different every week.
PM: Hino had a record volume of deliveries last year despite all the challenges. How much bigger could it have been in a more normalised market?
RE: We certainly could have sold more and delivered more, though that’s not necessarily the same number. The number of unfulfilled orders we carried into this year would suggest we had capacity to do somewhere between five and ten per cent more last year. Having said that, I’m not sure the bodybuilders could have built them and turned around the applications. Our Built to Go product can be in customer’s hands in a few weeks of arrival, and there are other applications that take six months to turn around. I still think we’re going to be in this restrictive environment for the rest of this year and probably next year as well. We’re never really going to find out what the real natural potential of 2021 was. It’s like trying to nail jelly against the wall.
PM: Do you foresee ongoing production constrictions in Japan over the next 12 months?
RE: Yes, I do and it’s going to be a moving target. It’s easy to singularise the issue around microchips but it’s no longer just one thing. It’s the remnants of the chip shortage situation which was probably close to getting solved in 2022. But then you add in COVID staff shortages and supply chain issues. Just moving componentry from country to country is proving to be a challenge. So even if you have the chips and your staff, then you’ve got to get the chips to where the factories are. Globally, freight movements are under immense pressure.
PM: The Hino 700 Series brings an end to a strong five-year product cycle for Hino locally. Are you pleased with how it has been received?
RE: It’s beyond our expectations to be honest. We were very confident about the product because of the significant changes and how it fitted into the market. Pleasingly, what’s been driving our volume of 700 Series has been our loyal 300 and 500 Series customers, who have traditionally probably bought a heavy truck from our competitors. Because of their strong relationship with us in the light- and medium-duty segments, these customers see a natural fit with how the 700 Series slots into their business model and their relationship with us. Customers are loving the Hino SmartSafe safety package that includes Driver Monitor, and a comprehensive Pre-Collision System. Pleasingly, the FY 8×4 will get Hino SmartSafe safety package within the next couple of months, meaning all 700 Series will be fitted with it as standard.
PM: What’s next in terms of development?
RE: For us, there is a window of opportunity with our 300 Series hybrid over the next three to five years. We have not been as aggressive on hybrid as we probably could have or should have been. As often in the truck business, it’s about the stars aligning. We’re in a customer-led business and we react to what customers are demanding from us.
We’ve had the product in market for 15 years so it’s unique in that regard. There is currently a window of opportunity, given the combination of pressure on fleets from the emissions perspective, fuel prices, and the seemingly large leap for existing fleets to fully convert to battery electric and hydrogen. That leap absolutely will happen, but we suspect it’s a bit further down the road and that there’s an opportunity for hybrid to gain some ground over the next three to five years.
PM: It sounds like it’s an ideal stepping-stone.
RE: Correct. That’s a good way of putting it. I think there’s going to be a pinch point over the next 12 to 18 months where there’s a push from our customers, stemming from shareholders and board level about commitment to emission improvement. However, the zero emissions products aren’t readily available or financially viable as yet. That’s where our 300 Series hybrid fits in.
PM: The seismic changes in a ‘zero emissions world’ call for new platforms, new infrastructure, new planning and investment. What are you excited about in terms of the road transport and freight movement sectors in Australia?
RE: I think it is going to drive creativity and lateral thinking and quicken up the pace of decision-making. There will be some innovation that hasn’t been previously anticipated. It could be the things that have been hidden in back rooms at OEMs with a little team that is not allowed to talk about anything to anybody. There’s going to be a few little secret projects that will probably be brought into focus, which is exciting for the industry as a whole. Some of these secret projects will emerge now because circumstances have turbocharged their practicality.
PM: Is there any legislative development you would like to see happen in Australia before the end of 2022 that may facilitate some of these innovations?
RE: Not to oversimplify things, but I believe governments still don’t really understand our industry, and the levers and buttons they could push to alter the outcomes. All around Australia, governments are talking about investing in electric and hydrogren infrastructure, which is fine and encouraging. In reality, one of the quickest and easiest things that governments could do, is to bring down the average age of our truck fleet for both safety and efficiency reasons.
For instance, think of a small ‘mum and dad’ business which has three trucks including an old banger that is 15+ years old. It’s unlikely that in the next five to ten years, they’re going to have the resources to turn their fleet to full electric. But, with the right tax breaks in place, they could renew their fleet, improve their fuel efficiency and reduce their CO2 output, plus their drivers would be behind the wheel of a much safer truck as well.
That mum and dad operation doesn’t need to buy a new truck. Instead, they just need to buy maybe a five-year old one to replace the older one. It will be available because we’ll be encouraging the bigger fleets to get rid of their five-year old ones to get new ones. So suddenly, it all feeds off itself – a win win.