December 27, 2011

Daimler Trucks improves profitability, productivity and capabilities for innovation

Indications are good that the global truck sector will continue to grow in the future.The current level of incoming orders at Daimler AG confirm this view: The orders for 420,000 units that Daimler Trucks received between January and November 2011
represent a 26 per cent increase from the prior year (334,200 units), as well as the best new order figure since 2007. Sales at Daimler Trucks were also up 15 per cent to 371,400 units during the same period. This result is mainly due to positive developments in the NAFTA region, where Daimler Trucks received orders for 124,400 units between January and November 2011 - its best result since 2006 and an increase of 81 per cent from the same period in the previous year. At 102,400 units, sales in the NAFTA region through November were up 47 per cent from the period January-November 2010 (69,700 units). Daimler Trucks sold 53,500 units in Western Europe between January and November 2011, or 11 per cent more than during the same period in the previous year (48,100). Despite the triple disaster in Japan, Daimler was able to sell 111,500 units from January to November, more or less the same number as during the same period last year (112,100).

Production at Daimler Trucks plants around the world will remain at full capacity into the first quarter of 2012. The medium and heavy-duty segments are developing positively in the NAFTA region in particular. We expect the truck market in the region to have grown by 35 per cent by the time 2011 comes to a close. The European truck market is expected to expand by the same percentage and Japan is headed for growth once again. The high demand for transportation services in the latter market will enable us to return to pre-earthquake levels. Daimler expects the truck market to expand by roughly 10 per cent in Brazil, and Mercedes-Benz do Brasil is currently headed toward a new production record.

Daimler Trucks remains optimistic despite some general economic risks. “The truck business is a capital goods business and therefore subject to cyclical fluctuations,” says Andreas Renschler, Member of the Daimler AG Board of Management with responsibility for Daimler Trucks and Daimler Buses. Adds, “We’re prepared for these cyclical ups and downs, and the exceptionally difficult year we had in 2008 demonstrated that our business model is effective. Our strategic approach enables us to flexibly adapt our global production systems to any and all sales and market situations, and we also offer the right product range and technologies for every market. In other words, our global sales are evenly balanced.”

Andreas Renschler about the outlook for 2012: “We’re keeping a close eye on the overall economic situation. To date, we expect Daimler Trucks to post another global sales increase in 2012. Things will continue to pick-up in the NAFTA region and in Japan. Although the general economic situation creates uncertainties for the truck business in Europe, we’re nevertheless prepared for all types of cyclical developments and can react flexibly as needed.”

Global market growth in the coming years
In view of the anticipated expansion of global truck markets, Daimler Trucks expects to be able to increase annual sales to more than 500,000 units by 2013. The division also plans to be selling 700,000 trucks per year worldwide by the end of the decade. “Because we seek to achieve not only growth but also profitable growth, we have set ourselves the clear objective of reaching an average return on sales of eight percent beginning in 2013 and plan to maintain this level of profitability across the entire business cycle. We’re definitely headed in the right direction," says Andreas Renschler:

Demand continues to increase rapidly in the new markets. Daimler Trucks is therefore expanding its capacity in emerging markets in particular. Daimler India Commercial Vehicles (DICV) will open its truck production plant in April 2012. BharatBenz’s initial production capacity will be 36,000 units per year, which can later be ramped up to 70,000 units. The trucks will be manufactured with a localisation rate of 85 per cent, which means DICV will take advantage of the Indian supplier industry’s potential from the very start. Daimler Trucks will also further expand its partnership with Kamaz in Russia. The two joint-ventures between Kamaz and Mercedes-Benz Trucks, on the one hand, and Kamaz and Fuso on the other, are already up and running and sold a total of 3,400 trucks between January and November 2011 (2010: 1,100 trucks). Kamaz presented the first jointly manufactured truck at the Comtrans show in Moscow. The featured vehicle was a Kamaz truck with Daimler components tailored to the needs of Russia - the largest truck market in Europe.

Now that the final approval has been given for the cooperation with Foton in China, the new joint-venture will be able to begin operations in just a few weeks. “The final approval of the joint venture between Daimler Trucks and Foton marks another important step in Daimler Trucks’ Global Excellence Strategy, one that will allow the division to thoroughly participate in the growth of the Chinese truck market over the long term,” says Renschler. Market volume for the medium and heavy-duty segment in China was 1.2 million units in 2010, and forecasts indicate that about 1.5 million trucks over six tons GVW will be sold in China each year by 2020.

Product offensive in Europe, North America, and Asia
Daimler Trucks consistently expanded and modernised its product range in all market regions in 2011. The Freightliner and Western Star brands opened the year with the introduction of state-of-the-art trucks in the vocational segment. Fuso presented a new generation of its high-volume Canter model and the new Actros has given Mercedes-Benz a benchmark truck for the European road freight sector. The new Mercedes-Benz Actros is the result of a substantial investment of more than 10 years of work, over 20 million test driving kilometers, and more than €2 billion spent on development and production technology. The vehicle is in fact the first long-distance haulage truck developed consistently to meet the Euro VI emission requirements. Fuel consumption has been cut by more than 7 per cent in the Euro V version of the truck, and even the Euro VI version consumes over four per cent less fuel than the predecessor model.
Daimler Trucks’ unparalleled product offensive marks a major step in the implementation of a global modular strategy, the most important example of which is the worldwide introduction of the new heavy-duty engine generation.

The new generation of engines has streamlined the previous range of four engine families from four plants down to just one family of engines manufactured at only two locations. The new generation of engines has already been successfully introduced by Fuso in Japan and by Freightliner and Western Star in the US. It also began powering the new Actros this year. The launch of the new engine generation means that Daimler Trucks is now using shared components in markets around the world.


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