Taking the market by storm
In only two years BharatBenz has practically revolutionised the Indian heavy truck market. GIANENRICO GRIFFINI brings us an exclusive interview with Marc Llistosella, head of marketing, sales and after-sales at Daimler India Commercial Vehicles (DICV).
Can you outline a short history of Daimler India Commercial Vehicles (DICV), its origins and its major developments?
We started the project in 2006 and got parts from all the joint-venture partners in 2009 (DICV was founded April 2009). We then built a 32 000-unit plant, which can be enlarged to build 80 000 units. Over the last five years we’ve built a dealer network of 75 3S dealers and 82 locations.
Even in these sluggish conditions we had no problem finding good partners. We were able to choose the 32 best options from 1 200 potential partners. We felt we only had one chance to build a network based on pride, integrity and business understanding. Our milestone plan is to have completed the network by 2015.
We’ve now launched all the products that we said we would. The quality is perceived to be state of the art, which is clearly appreciated by the customers. It is now a brand built on reputation, which people aspire to own. Our competitors use our brand as a benchmark, so we’ve done something right.
This year we will easily pass the 10 000-unit mark; last year we sold 6 500 units and we feel we’ll double that. Our mandate is that we have to deliver what the customer in this country needs.
What’s the best selling model in the BharatBenz stable today?
The 3123 four-axle rigid is our bread-and-butter product, then the 2523 tri-axle rigid, the 2523 6×4 construction/mining model, and the medium-duty rigid trucks. These four models make up roughly 70 percent of the sales.
In the first year, we started every month with 300 units. Last year we increased it to 500 units. In the second half of the year we increased to 700, and we are now on 1 200 units. It makes no sense to ramp up production in the first few months – a step-by-step increase is more sustainable to maintain our position and reputation.
It’s a good, reasonably priced product and the customers perceive it to be very reliable. They say they are proud to be connected to this brand. Customers want to make an investment that is not seen as cheap; they want to be seen to have made a smart choice and to have the best product. This is why building the reputation of the brand was very important to us. Word of mouth is really important.
Tell us about localisation of components.
The products are 85-percent localised. We want to have everything localised because the foreign exchange rates swing up and down. It’s not only about the import duties; we need the flexibility to react fast.
Initially we thought we’d build to stock the dealerships, but as the customers take up the product we have to build more and more to order. This shows that we don’t just dump our trucks on the market. We have a very fast turnover – the average time for stock to remain in a dealership is no more than 20 days.
So you adjust to the market trends?
Currently our competitors have stock in India of 40 000 to 50 000 trucks and monthly sales volumes of 14 000 to 15 000 – they have stock to last three months.
Can you describe the Indian market segment?
Subcontractors are very common and they often make up the second lifecycle of the truck. They have huge fleets of 4 000 to 5 000 trucks, but there are also a lot of smaller fleets: 140 of the biggest fleets combined would make a fleet of roughly 120 000 trucks. Yes, we’re increasingly targeting the smaller fleets, but the opinion makers are the big fleet owners.
What about the total volume of the Indian market?
I refer to the market between six and 49 t, and in our case between nine and 49 t. The segment between six and 49 t is roughly 2 000 units a month, or roughly 24 000 units a year.
This year the market was between 180 000 and 200 000 units. Last year it was 206 000 units, and in 2011 it was 311 000 units. In India there are 1,3 billon people, and in five years the population will exceed that of China … The potential of this market is at least 500 000 to 700 000 units.
What is the most popular truck configuration in India?
It’s the 25 to 31-t three or four-axle rigid trucks, which account for 80 000 to 120 000 units. What we want to push is the 49-t 6×4 truck tractor.
What about regulations in India?
The laws are there. Business leaders have high hopes for the new government; the leader is a very reasonable and business-oriented person, who is interested in the opinions of business owners. Changes will come step by step. Enforcement is a huge problem and efficiencies are suffering. We can’t afford these obstacles. There has to be a framework.
Are European emission standards being followed, and what about fuel quality?
Yes, they are on Euro 4 – we call our vehicles “Bharat 4”. Euro 5 will come in about a year, but we are already selling “Bharat 5” vehicles.
Fuel quality is not bad. The sulphur content is much lower than in places such as Indonesia and Africa. Diesel is sometimes diluted with kerosene, which is subsidised, making it cheaper. During the past two years we haven’t had a problem with fuel.
Will we see BharatBenz buses and coaches?
We have an independent bus and coach unit in DICV that we support heavily. We are starting to develop chassis with rear engines. Front-engined buses make up over 90 percent of the market.
We are also able to export the chassis from India, which have been tested in northern Africa and Chile. Next year
we will show off our BharatBenz second-wave vehicles, which will also include these buses. You’ll like them. They have a cool design!
There is talk about BharatBenz looking at overseas markets …
We decided to merge our two Asian entities into Daimler Truck Asia and we’re asking whether we should go into all the markets that have our family brands. In some markets it makes sense and others it doesn’t … But why should we not use this platform, especially in markets such as Africa? We can leverage the advantages of the production costs of both companies (Fuso and BharatBenz). Sourcing could be incomparable.
For customers in these countries, under the Fuso brand, products will be robust and reliable, easy to repair and will feature very good operational economics.
As regular readers of FOCUS know, this magazine has been appointed an associate member of the International Truck of the Year (IToY)! FOCUS is the sole South African magazine to have joined this prestigious body. One of the advantages of this association is access to exclusive articles, specially written for FOCUS by ITOY jury members. This is one such article.