With its strong brands and products, Daimler Trucks is prepared for the future

With its strong brands and products, Daimler Trucks is prepared for the future
March 2009
  • Global presence safeguards world market leadership
  • Truck Operating System to result in a leaner, faster, more adaptive organization over the long term
  • Penetration of new markets and development of new products
Stuttgart – Last year, Daimler Trucks successfully defended its position as the world market leader in its sector by recording unit sales of 472,100 trucks, a one percent increase from 2007. Revenues rose by €106 million to €28.6 billion. Sales, revenues, and earnings at the division were headed for new records over the first nine months of 2008, before the global financial and economic crisis led to a decline in incoming orders from around the world in the fourth quarter. Despite this crisis and one-time charges associated with the restructuring of Daimler Trucks North America, EBIT still reached €1.6 billion last year (2007: €2.1 billion).
Andreas Renschler, member of the Board of Management of Daimler AG with responsibility for Daimler Trucks, explained the reasons behind business developments in 2008 in Stuttgart today. Renschler also commented on Daimler Trucks’ strategy for effectively positioning itself for a successful future, as well as the division’s plan to emerge from the crisis even stronger than before. “Our sector has been marked by strong cyclical fluctuations for decades,” Renschler said. “We therefore know a lot about rapid market declines, and our Global Excellence program and Management of Cycles initiative make us well-equipped to deal with such situations.”
Despite sharp market fluctuations in the commercial vehicle segment, and a serious lack of global demand, the long-term development of the triad markets could be very different, according to Renschler. For more than 20 years, Europe has been experiencing a continual expansion, mainly as a result of dynamic developments in Eastern Europe. The commercial vehicle market in the NAFTA region has stabilized over the long term, according to Renschler. Japan, on the other hand, has been experiencing a structural downward trend for quite some time, which has caused the commercial vehicle market to lose ground after every downturn. Commercial vehicle sales are experiencing a positive trend, on the other hand, in emerging markets, which already account for half of all global truck sales. “It’s clear that when the world economy experiences a downturn, the global truck sector will be among the hardest hit,” said Renschler, referring to current developments. “Nevertheless, those who broaden their position, as we have done, will remain more stable when things get rough.”
Daimler Trucks is well-positioned for the future with its Global Excellence program and the four initiatives Management of Cycles, Operational Excellence, Exploitation of Market Potential and Penetration of New Markets, and Future Product Generations and Technologies. The division already introduced measures back in 2006 that are now having a positive effect. Daimler Trucks also has a flexible production network that lessens the impact of market fluctuations.
Additional measures have been implemented over the last few months. Trucks Europe/Latin America, for example, has launched a program to strengthen its production system and its cost and cash-flow position. The unit will also begin implementing short-time work at its German plants in April and May. Trucks NAFTA is restructuring its activities, among other things by closing one plant, with a second plant set to follow. In addition, Daimler Trucks North America is now focusing on a two-brand strategy. Trucks Asia is operating in a structurally challenging market, but it also is a key volume driver for Daimler Trucks. All processes at the unit are therefore now being evaluated regarding their effectiveness. “We expect all the measures we’re implementing to generate baseline savings. We’re also determined to take even further measures should the situation worsen,” Renschler said.
Truck Operating System to lead to leaner, faster, more adaptive organization over the long term
“Our focus at the moment is not just on short-term crisis management measures,” said Renschler. “Instead, our ultimate goal is to regain our ground and become even better than we were before the crisis.” Renschler pointed out that the Truck Operating System (TOS) offers a good example of a preventive package of measures that will lead to sustained success. TOS represents the lean management approach Daimler Trucks is taking in order to permanently make the division leaner, faster, and more adaptive. TOS is ushering in a cultural transformation that affects all processes and management levels.
TOS standards were utilized for the complete design and construction of the new Daimler Trucks North America plant in Saltillo, Mexico, which opened at the end of February 2009, and now produces Freightliner’s Cascadia flagship truck. The facility’s compact layout, low component stockpiles, reduced waste, great flexibility, and minimal downtime and maximum cycle time make it a production benchmark.
Penetration of new markets and development of new products
Renschler also emphasized the importance of continual implementation of the Global Excellence Program: “Trucks are the backbone of the world economy. All growth requires trade - and trade requires transport. That’s why we will not allow anything to stop us from penetrating new markets with new products.” Mercedes-Benz do Brasil has been operating for 50 years in Brazil, where it is the number one heavy-duty truck brand, with a market share of 30 percent. In Russia, Daimler Trucks has entered into a strategic partnership with Russian truck-market leader Kamaz, and the division is also currently examining 17 different projects for joint implementation. A joint venture has been established in India in order to penetrate the Indian volume market, and, in China, Daimler Trucks continues to focus on cooperation with Foton.
Meanwhile, Daimler Trucks is relying on new products and environmental technologies to remain successful in its traditional core markets. The Mercedes-Benz Actros has been named Truck of the Year 2009. With the construction-sector variant the new Actros model-range completed. Mercedes-Benz has already sold more than 200,000 trucks equipped with efficient, environmentally friendly BlueTec technology using selective catalytic reduction (SCR). Daimler Trucks North America will launch this technology next year to coincide with the introduction of the new EPA2010 emission standard in the U.S. With its Canter truck, Fuso is the technology leader in the light truck segment, and its Fuso Canter Eco Hybrid is now available as a production truck in Japan, where some 600 units have already been sold. Finally, Europe’s largest fleet test of hybrid trucks is now under way in London.
Daimler Trucks is preparing for various future scenarios, ranging from an impending market recovery to stable orders at a low level and even a further downturn of the global economy. The measures implemented by the division have put the commercial vehicle manufacturer in a good position to emerge strengthend from the current crisis. “The long-term outlook remains outstanding for the commercial vehicle sector, and especially Daimler Trucks,” said Renschler, who also reported that global standards are becoming increasingly aligned with one another, and that such a development offers a great advantage. As a vertically integrated global player, Daimler Trucks is well-positioned, Renschler said, and it has the right products, processes, and production locations around the world: “The path to the future will be a rough one - but we have an edge, and it’s one we’re going to exploit.”

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Daimler Trucks is active worldwide - with Mercedes-Benz trucks in Europe and Brazil, Freightliner and Western Star trucks in the NAFTA region, and Fuso trucks in Asia. An essential building block for the future of the world’s biggest truck manufacturer, this global presence is being gradually expanded. This calls for opening up new markets with above-average growth opportunities, including Russia, India, and China.