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Daimler CEO talks growing share, struggling market

Posted: October 6, 2016 by John G. Smith

LAS VEGAS, NV – It’s a tough market for truck sales these days, but Daimler Trucks North America president and Chief Executive Officer Martin Daum still sees a “light at the end of the tunnel” – and is setting firm goals for the year to come.

Where Canadian Class 8 sales were up 6% in 2014 and 3% in 2015, they are down 24% this year. Daum expects 360,000 Class 6-8 trucks to be sold in the NAFTA region this year, down dramatically from 424,000 units last year, and even the 384,000 in 2014.

It’s a drop that admittedly took Daimler by surprise. “We were much more optimistic about 2016 twelve months ago than we are today,” he said during a wide-ranging briefing with industry media. Even the optimism for the year ahead is tempered. Daum predicts that demand should begin to climb midway through 2017, but still fail to overcome a slow start at the top of the year. Instead, he expects sales to recover in 2018, in part because there will be a surge in four- and five-year-old trucks that will be due for replacements.

“Our industry is an industry with a pretty long-term horizon,” he added.

But the focus is on more than sales volumes alone. There’s also the race for market share. In the U.S., Daimler brands including Freightliner and Western Star held 42% of the Class 8 truck market. He’s also “extremely pleased” about the company’s position in Canada, where Daimler held 39.9% of Class 6-8 sales as of August, up 4.3% from the year before. PACCAR holds 21.6%, Navistar 16.7%, and Volvo and Mack collectively hold 16.1%. “Market share is more a result of the product,” he said.

It wasn’t the only dig at competing brands. Referring to the Cascadia as the “pinnacle” of the industry, he said, “We don’t have to fear any new unveiling of any new products.” International launched its new Class 8 lineup just days earlier. And saying that unveiling a prototype is easier than bringing a product to mass production could be seen as a jab at Volvo’s recently unveiled SuperTruck. Referring to the slow introduction of Daimler engines in medium-duty trucks, he said, “to anyone who wants to come into the North American market with a new engine should know it isn’t that easy.” Volkswagen invested in Navistar just weeks earlier, pledging to bring a drivetrain to the market by 2019.

Detroit power will be available in each of the company’s brands by 2018. “It’s not that we want suppliers out. It’s just too complex an issue,” Daum said, referring to the complex computer algorithms required to meet modern fuel economy goals.

The company’s targets are not limited to sales volumes, either. Daimler wants trucks to emerge from dealer service bays within 72 hours, largely with the help of Express Assessments and the Elite Support program that has certified 218 dealers, with another 90 locations in the works. In 2014, 65% of trucks passed through Daimler service bays in that timeframe. Last year, the share rose to 71.4%. The company is on track to reach 75% by year end. Then the goal will be stretched to 85% for the end of 2017.

“We have to have the turnaround as possible,” he stressed. “We need a great network and we need to continually improve.”

Of course, there are limits to how high that percentage can go. Repairs in the wake of serious collisions, for example, will always take longer.

Like all other manufacturers, Daimler is also preparing for the second phase of Greenhouse Gas rules that will apply to 2021-27 Model Years. Daum referred to the regulations as a “tough, but manageable compromise”. The lead time offers a sense of certainty, and will represent 20 years of evolving technology without a “disruptive” event such as those that led buyers to purchase trucks ahead of mandates, and flooded used truck markets with equipment. There is also flexibility in how the targets can be met, he noted, adding that they will not require electrification or waste heat recovery, but might lean on axle lubrication and 6x2s.

Goals for 2017 include the rollout of the new Cascadia, and introducing “unexpected killer apps” to further support connectivity. 

Service is seen to be a differentiator, too, and he wants the market to come to trust the company’s medium-duty engines. (“It’s a true Detroit engine. It’s not a European engine.”) Then there is the matter of managing the weak market, and staying ahead of competition.

“We never underestimated any competitor and we will never overestimate any competitor,” Daum said. “We want to be the voice of the industry, the leading brand.”

 

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