When Andreas Renschler, member of the Board of Management of Daimler AG and Head of Daimler Trucks Division, stood up at this year’s IAA Commercial Vehicles show, it was with a very simple agenda. Daimler Trucks has spent the last three decades moving from a European to a global producer of trucks. It can now lay claim – through deals struck with KamAZ and Beiqi Foton, and through its standalone Indian BharatBenz venture – to the possession of a footprint upon each continent, and, during the course of his 90 minute presentation to IAA attendees, Renschler reasserted Daimler’s claim to the top of the global truck building pile.
Of course, as of the time of writing – October 2012 – one could reasonably ask if this is a pile that one would wish to stand atop. Just 14 months ahead of Euro VI, Europe displays an almost disdainful lack of urgency; North America has slowed with alarming speed, while, of the BRIC markets, only Russia is outperforming on year-on-year measures.
Renschler remains bullish, however, and points to at least reasonable fundamentals within North America as a positive: “Transportation demand is really going in the right direction, and the next couple of weeks and months will show what the order intake will be for the next year,” he explains. “We’re getting some good signals from the fleets: the signals are there, and the fundamentals are not so bad.”
Unsurprisingly, he sees Europe as a market made up of many parts: “Western Europe is indeed a tough market this year, and we expect a slowdown of between zero and ten percent,” he says. “This, as a matter of the fact, depends on South Europe, of course. Of the others, Eastern Europe is running much better, and Russia has two-digit growth. So overall, it could always be better, no doubt, but it could also be worse. So, I’m not the happiest man, but I’m not the unhappiest man either, when it comes to Europe. The fundamentals are there with the ESM decision taken by the European Union, and the Federal Court in Germany helped a lot to stabilise the situation. Maybe over the next couple of weeks we’ll see some more progress in the right direction to enable investors and customers to gain more trust in the EU.”
A regular topic of conversation during the lead in to Euro VI – due to take effect in January 2014 – has been its cost of development. Given that it was, by a long stretch, the first to the party with its Euro VI Actros, Daimler has, perhaps unsurprisingly, come under increasing scrutiny in terms of rumored cost over-runs. So, did Daimler launch too soon and spend too much?
“You know, if I was the competition, and somebody brought out a truck like the Actros, the first of a new platform of trucks, then I might be tempted to say the same,” he says. “And if you add to this the fact that not only have we launched an all new truck which has redefined the European standard, we have also done so in such a way as to improve fuel consumption. If I was the competition I would argue the same.
Renschler is keen to point out the magnitude of the Euro VI challenge: “We had no choice in the matter. First of all, we had to renovate the whole product programme because of the new engine, and everything led on from there,” he says. “This in itself was a big move and this happened with the so-called SFTP – Strategic Future Truck Product Platform. And this was successful. But, you know, as you build the first 5,000 trucks they will always be more expensive than the old one. But now that the models are running, that cost issue is reducing. And I’m really happy – 30% of all orders for the new Actros are already Euro VI. So, ahead of the new legislation, with a new truck, we have received nothing but praise. That makes me feel very good about the future, and if the only come-back that our competitors have is one of cost, then my confidence is even higher.”
The SFTP – Strategic Future Truck Project – is a cornerstone of Daimler Trucks’ global strategy. While the notion of a homogenised global truck product has long been pointed to as naive, Daimler’s adoption of a scaled approach allows R&D costs to be borne across a number of products in a number of regions with increasing – if not complete – commonality. This has been Daimler’s oft-cited strategy for some years now, and leads to a very simple question. When does the payback begin?
“I think that we’ve been very clear on our strategy over the past seven years,” says Renschler. “It has always been very ambitious, and has had to be underpinned by significant investment. But, this is now 2012, and we stand by the claim that this strategy will allow us to return 8% through the cycle. In addition, we have established a very viable presence in Russia, in India and in China, which, added to our existing business in Brazil, gives us full coverage of the BRIC markets too. No doubt, this has taken a lot of time and has cost a lot of money, but we are now standing by to see the return on that investment as we move into the future.”
One can fashion a narrative that tells of a move from national to regional to eventually global truck manufacturing operations over the past four decades, and, clearly, it is a narrative with Daimler at its center, but does Renschler see this as a process that – from the perspective of the entire industry rather than its component companies – is now complete?
“That’s a good question,” he responds. “If I look around, I don’t see many global companies in the space – really our Swedish friends are the only other truly scaled global operation. In the past, they have had certain advantages because they were a step further ahead than we were. Now, after a lot of hard work, we have levelled the playing field, and will begin to reap the benefits. If you are not scaled and global now, I think you will find it very difficult to be so in the future.”
Clearly, 2013 will prove to be a year of very significant challenge for everyone within the truck industry. The macro landscape is strewn with some sharp rocks, and, in many respects, plotting the likely prospects for a global truck manufacturer is an issue more of economic than industrial forecasting. Many would argue it was ever thus, but, this time around, Daimler is positioned to weather the storm with a global portfolio and an almost completely revised product range. There are many players in the business who are not so well set.
