daimler india commercial vehicles strategies

A Brief Report on:

Daimler India Commercial Vehicles “Bharat Benz”

For Academic Purpose Only. Not for any commercial use

Source: Internet

Agenda

Agenda: • Daimler Platforms for India • Definitions – for understanding customer segments • Customer Segments Targeted by Daimler – Light Duty Trucks (ICV) • Customer Segments Targeted by Daimler – Heavy Duty Trucks (HDT) • Customer Segments Targeted by Daimler – Tippers • Daimler Key strategies for Indian Market • SWOT Analysis of Daimler India Commercial Vehicles. • Daimler India Pricing Strategy • Daimler India – Fuso Update


Source: Internet

Premium Segment MB India

Heavy Duty Trucks (HDT)

Medium Duty Trucks (MDT)

Light Duty Trucks (LDT)

Actros 8x4 Tipper

GVW 6 – 16 t

Bharat Benz

Fuso

-bas

ed

GVW >25T

MB

Tru

ck –

bas

ed

Localized

Daimler Platforms for India

Localized

CKD


Source: Internet

Definitions

KBF – Key Buying Factors

Extent of

loading

Rated

Load (=

GVW)

Moderate

Overload

(upto 30%

of GVW)

High

Overload

(upto 60%

of GVW)

Extreme

Overload

(> 60% of

GVW)

Haulage

Distance

(One way)

Very Short

(upto 100

km)

Short

(100-250

km)

Medium

(250 - 700

km)

Long (>

700 km)

Driving

Speed

Low Speed

(upto 40

kmph)

Medium

Speed (40-

60 kmph)

High

Speed (>60

kmph)

Fleet Size OD (1

vehicle)

OND (2-4

vehicles)

SFO (5-

10

vehicles)

MFO (11-25

vehicles)

and LFO (>

25 vehicles)

Business

Sourcing

Market

Load

Contract Captive

Captive = Owns vehicle and transportation is means for doing primary business Market Load = Stands in the market / stand / yard / Transport Nagar to get business (directly from single customer), transportation is primary business Contract = Transportation provided through long term service agreement, transportation primary business

Usage Characteristics User Characteristics

Definitions for understanding Customer Segments Targeted by Daimler India Commercial Vehicles


Source: Internet

Customer Segments Targeted by DICV – Light Duty Trucks (ICV)

(40%)

Industry Size:

65000 (CY

2011)

Segment Characteristics Future Outlook Segment

60%

Rated Load

Over Load

40%

Economy \Strider\ Price

Minimiser

Performance Seeker \ Zipper

Progressive


Minimiser

Work Horse \ Striver \ Load

Maximiser


(15%)

(5%)

(10%)

(2%)

(28%)

2016 2020 2025

(40%)

(8%)

(17%)

(4%)

(7%)

(26%)

62%

38%

(37%)

(5%)

(22%)

(5%)

(11%)

(20%)

70%

30%

(32%)

(3%)

(28%)

(6%)

(20%)

(11%)

80%

20%

KBF's Usage Customer

Type Source of Business

Low Acquisition Price Medium Speed OD,OND, SFO,MFO

Market Load

More Fuel Economy Medium, Long Haul Contract



Low Acquisition Price Medium Speed OD,OND, SFO,MFO

Market Load




Turn around Time High Speed

MFO, LFO

Contract, Captive

Pick Up & Acceleration Medium, Long Haul

Ease of Driving



Turn around Time High Speed

MFO, LFO

Contract, Captive


Ease of Driving



Overload Capacity Medium Speed OD,OND, SFO,MFO

Market Load

Sturdiness Medium Haul

Reliability

Strong Engine (HP)



Safety & Comfort Medium Speed MFO,LFO

Contract Captive Style Medium, Long Haul

Overload Rated Load

Upto 10% of Overload on GVW is not considered in Moderate Overload

Customer Segments Targeted by Daimler - LDT

Source: Self Analysis. Pl refer for my Market Segmentation file to understand it better. For Academic Purpose Only. Not for any commercial use

Source: Internet

Customer Segments Targeted by DICV – Heavy Duty Trucks (HDT)

(55%)

Overload Rated Load

Rigid

80%

Rated Load

Over Load

20%


Minimiser


Progressive


Minimiser


Maximiser


(20%)

(5%)

(8%)

(2%)

(10%)



Low Acquisition Price Medium Speed OD,OND, SFO,MFO, LFO

Market Load




Low Acquisition Price Medium Speed OD,OND, SFO

Market Load More Fuel Economy Medium, Long Haul



Turn around Time High Speed MFO, LFO

Contract, Captive


Ease of Driving




Contract, Captive


Ease of Driving



Overload Capacity Medium Speed OD,OND, SFO,MFO, LFO

Market Load, Contract

Sturdiness Medium, Short, Long haul

Reliability

Strong Engine (HP)



Safety & Comfort Medium & High Speed

MFO,LFO

Contract

Style Medium, Long Haul

Segment Characteristics Future Outlook Segment

Customer Segments Targeted by Daimler - HDT

2016 2020 2025

Dat

a n

eed

s to

be

add

ed

Source: Self Analysis. Pl refer for my Market Segmentation file to understand it better. For Academic Purpose Only. Not for any commercial use

Source: Internet

Customer Segments Targeted by DICV – Tippers

(3%)

Overload Rated Load

Tipper

Segment Characteristics Segment

5%

Rated Load

Over Load

95%


Minimiser


Progressive


Maximiser

(1%)

(1%)

(55%)



Low Acquisition Price Medium Speed OD,OND, SFO,MFO, LFO

Market Load




Low Acquisition Price Medium Speed OD,OND, SFO

Market Load More Fuel Economy Medium, Long Haul




Contract Pick Up & Acceleration Medium, Long Haul

Ease of Driving



Overload Capacity Medium Speed OD,OND, SFO,MFO, LFO

Market Load, Contract

Sturdiness Medium, Long haul

Reliability

Strong Engine (HP)



Safety & Comfort Medium, High Speed

MFO,LFO

Contract

Style Medium, Long Haul


Minimiser (40%)

Future Outlook

Customer Segments Targeted by Daimler - Tippers

Source: Self Analysis. Pl refer for my Market Segmentation file to understand it better.

2016 2020 2025

Dat

a n

eed

s to

be

add

ed


Source: Internet

Daimler Key Strategies for Indian Market

3 key strategies of Bharat Benz to establish itself in the Indian CV space:

• Aggressive target pricing so as to compete effectively with entrenched competitors like Tata Motors and Ashok Leyland

• Focus on Customer Service from the beginning to differentiate with the existing CV majors and establish its brand

• Placing products in the ‘new middle market’ which are just about 5-10% costlier but with high-end features and higher HP engines (for faster turnaround time) – unlike Tata Prima, Volvo FH etc. which comes in at a very high premium pricing (almost 2-3 times of the basic / conventional CV range)

Emergence of a ‘new middle market’ – where Bharat Benz plans to establish itself

Source: Internet Price Ranges have changed, only for reference to show the relative price positioning

Rs 1.5 to 1.8 MINR

Rs 1.8 to 2.2 MINR

Rs 3.0 to 4.5 MINR


Source: Internet

SWOT Analysis of Daimler India Commercial Vehicles

SWOT Analysis for Daimler India Commercial Vehicles

Strengths: • ‘Benz’ brand recall among many sections of the

Indian market – make Bharat Benz easy to establish itself

• Aggressive pricing may allow it to compete meaningfully with entrenched players • Backed by global technology • Changing paradigm – with customers willing to

experiment may support its entry in the Indian market

• Leverage the export potential along with domestic volumes.

Opportunities: • Upgrading the Indian CV operators by creating the

new-middle market through provision of global technology at a marginally premium priced products

• Participation in one of the world’s largest CV market • Daimler can get a strong foothold in the rapidly

growing Indian CV market • Export to various countries.

Weaknesses: • Lack of Indian market experience and knowledge • Unproven products given that they are tweaked for

the Indian market • Lack of strong and established sales and service

network • India operations have been built from scratch, with

no readily available global blueprint for help

Threats: • Execution risk – Current Capacity: 70000,

Investment: 700 Million Euros. Daimler must ensure that all the elements of its strategy must get well executed. Else, its bold attempt can prove to be a big setback which may floor Daimler for a long period of time

• Timely aggression from the Indian CV players.

SWOT Analysis

(Daimler India Commercial

Vehicles)

Source:Internet


Source: Internet

Daimler India – Pricing Strategy

Pricing Strategy – Global trucks at local prices

Daimler plans to price its ‘BharatBenz’ trucks just about 5-10% expensive than the existing truck models in the market of that of Tata and Ashok Leyland. Some of the pointers to this aggressive pricing strategy may be as following

• Higher localization (85%) from the beginning – at local prices o Local manufacturing of engines – contract & in-house o In-house manufacturing of frames, axles, sheet metal parts etc. o Local procurement of most of the components – with a large vendor base (~50%) located within a 50 km

distance of the mother plant in Chennai. o Will also act a shield against currency fluctuations

• Huge tax benefits – Full-fledged manufacturing in India helps in reducing taxes o Customs duty for imported FBU o Customs duty for imports of SKD kits o Excise tax for locally manufactured trucks (including engines and other aggregates)

• No-frill / Stripped down versions of their existing models – Mercedes-Benz Axor and Fuso Canter products. Basically, Daimler would provide a no-frill products without features such as AC, power windows etc.

• Additional revenue stream – test track as a ‘Profit Centre’, i.e. it will lend out the test track to others even to its component vendors and non-core competitors which will help in augmenting its revenues, although it may not be a major revenue earner

Source: Internet


Source: Internet

Daimler India – Fuso Update

Fuso Update:

Daimler Trucks Asia exports first FUSO Trucks “Made in India”

• The Daimler commercial vehicles subsidiaries Mitsubishi Fuso Truck and Bus Corporation (MFTBC) and Daimler India Commercial Vehicles (DICV) are working side by side on achieving the joint unit sales target of 290,000 commercial vehicles until the year 2020.

• Under the umbrella of Daimler Trucks Asia, MFTBC is now going a step further together with DICV: With a view to boosting the presence in the growth markets and tapping into further sales potential, the two companies are going forward with an integrated product portfolio for greater variant diversity and an optimized production network with the truck plants in Kawasaki, Japan, and Chennai, India, as the main production hubs.

• In addition to producing BharatBenz trucks for India, since May 2013, DICV is also making FUSO trucks for selected export markets in Asia and Africa.

• By the end of the year, Bangladesh, Zambia, Tanzania, Uganda and Brunei will also be supplied with state-of-the-art trucks under the FUSO brand from India.

• The successive roll-out in the growth markets of Indonesia, Thailand, Malaysia, Malawi, Zimbabwe, Mozambique, Mauritius and the Seychelles is planned for the year 2014.

• The new, medium-duty and heavy-duty FUSO models are based on the same technical Daimler Trucks product platform as the BharatBenz trucks. This enables the production of both truck brands under one roof.

Source: Daimler Investor Relations Release June 2013


Source: Internet

Thank you …

daimler india commercial vehicles strategies

Business

lfo medium

acceleration medium

primary business market

long haul mfo

commercial use source

fuel economy medium

market load sfo

daimler hdtrated load