Daimler India Commercial Vehicles to break even in 2018

Daimler India Commercial Vehicles (DICV), which started retail sales in the country in 2012, has reported a marked uptick in its numbers. The company, which caters to the above 9-tonne truck market in India, has expanded its product portfolio with a presence across the critical mediaum and heavy CV segment. With over 55,000 trucks sold till now, the company expects its India operation finally to break even in 2018 on back of growing volumes and more than 60 percent of its authorised dealers reporting profitability.

In a candid interview to Autocar Professional on his last trip to India in his current role, Marc Llistosella, president and CEO, Mitsubishi Fuso Truck & Bus Corporation and Head of Daimler Trucks Asia, said, “We stand one-and-a-half years behind our original expectations but, in terms of market share, we are in double-digits since quite a few months. In terms of profitability, we will have break-even and our target is 2018. If this comes true, after five-and-a-half years into operations, then, not boastfully, but it is something significant.”

DICV initially invested around Rs 4,400 crore in setting up the state-of-the-art plant at Oragadam and in 2014, it invested another Rs 425 crore in a bus manufacturing plant. 

In 2016, although the overall market in India was smaller than in 2016 – as a result of regulatory and tax changes especially in the first half of the year – Daimler Trucks significantly increased its unit sales in the fifth year since the launch of the BharatBenz brand. From January through November, 15,200 vehicles were delivered (2016: 12,100; +26 percent), the market share increased by 2.3 percentage points to 9.0 percent. The company has also ventured into the bus market in 2014 with school, staff and tourist buses. The company is already present in the intercity rear engine premium coach segment. In 2017, it has expanded its bus portfolio with new 16-tonne intercity front engine coaches.

Llistosella added. “We are ranking good in market position, localisation, product quality and it is the belief of our suppliers, dealers, and our associates, who have always made us stronger. Who would have believed that the quality of the products would be so sublime and outstanding that we could directly put a ‘Mercedes-Benz’ badge on them and be allowed to sell them abroad?

When asked about things have not gone as per the initial plans and company’s dealers have made huge investments with their profitability remains a key issue, he said, “This is always there when you invest and you start from the scratch. I would say that almost 60 percent of our dealers are now profitable. But, this is where you have to have a vision and be persistent. One should be adaptive and not change the strategy too often. One should listen to the surrounding, bow the head and then all that matters is focus and shoot. We have localisation, which was not dreamt of, and we have nudged existing players in the market, who have been operating since decades before our arrival.”

“When we started, nobody believed that we would ever be allowed to put the Fuso, Freightliner or the Mercedes badge on trucks produced by us, but, we did it. So, when everyone says that it is not possible, that is always a motivation for me to stand up and show that it is possible.’

With the refresh of the medium-duty range in 2016 and the all-new heavy-duty range in 2017, BharatBenz updated its entire truck portfolio within a short span of time. BharatBenz products are sold and serviced through an all-Indian network of over 130 touchpoints including those in Tier 2 and Tier 3 cities.

Speaking on the challenging time in India, he said, “The credit crunch of 2009 was tough, but we survived it. Then, 2014 again was tough as GST was getting postponed, the BS IV emission norms were postponed and all these factors, which were important to our vision of modernising the trucking industry in the country, were not in our favour. This led to a certain form of frustration, but, even though it has been slightly delayed, but, now, everything has fallen into place.”

In September 2017, the company completed five years of commercial sales with cumulative sales of more than 55,000 BharatBenz trucks with double- digit market share in recent months, claiming third position in the heavy duty truck segment. The company also ramped up production with two-shift operations and introduced a Euro 5-ready medium-duty truck.

India as an Export Hub
Other than being a key growth market, India serves as an important export hub for DICV: 10,000 trucks have been exported from its state-of-the-art production plant at Oragadam near Chennai since the start of the vehicle exports in June 2013. In 2016, exports from India again doubled up to more than 4,000 units.

The Fuso and Mercedes-Benz vehicles for export are manufactured on the same production lines as the domestic BharatBenz portfolio. The trucks already get exported to more than 30 markets in Asia, the Middle East, Africa and Latin America.

Within this year, this number will grow up to 40 markets on three continents, including Bahrain and markets in Africa and Latin America. All exported trucks are leading in terms of safety, reliability, and efficiency and fulfill the diverse requirements of customers in the different target markets.

The full interview with Marc Llistosella appears in Autocar Professional's February 1, 2018 print magazine