Marc Llistosella, President & CEO, MFTBC, and Head, Daimler Trucks Asia

Interview by: Gianenrico Griffini

Higher horsepower

Q. Last year you spoke about scaling up production every month. Did you achieve the expected result?

A. To be very honest, we failed to achieve our set targets. We expected to do better as the market forecast was promising. The markets however went up by just 12 per cent. For a market like Europe, this might be good. But, since it was dropping more than 45 per cent in the years before, it required to bounce back with growth hovering around 60 to 70 per cent to return to where you started. The market was in our favour in 2010-11 for 9-tonne plus vehicles at 280,000 units. In 2014 it went down to 171,000 units. There was deterioration of 1,10,000 units, which is equivalent to 35 per cent when compared with 2011 figures. The net price that we had in December 2010 is what we have today. So the overall impact is not limited to volumes, but is also in pricing. The nominal pricing includes inflation too. Our competitors are technically selling trucks at a price, which is 20 per cent lower than what it was in 2011. This is something that we had never imagined. In heavy-duty vehicles, we have an average discount of 20 per cent. In medium-duty vehicles, we have a discount of 12 to 14 per cent, which exceeds the discount plan that we had planned. We had never expected this kind of continuous discount levels. At the other end, we grew in the first quarter. This was confirmed in April through 63 per cent BharatBenz sales. This is roughly 12.5 per cent, which is a good performance. But the market is not letting us live easy. There’s not a single day when there’s tailwind. For three years, we have only got headwind, and it’s been a fight for survival. We wish that there is a normal market like in 2010-11. It’s high time that we talk about 8 to 9 per cent market share and immediately touch the 20 per cent mark. I was always clear that I needed the best quality here, but it is now so competitive that our trucks are bought by Hino, dismantled and tested. We were earlier targeting Tata Motors and Ashok Leyland, but now these trucks will compete with Scania and Volvo as well. That is a little bit more than what we had ever hoped for.

Q. What do you expect at the end of this year?

A. I would say that we should stay with our 60 per cent, but I expect more. I think the market will stabilise at a level of 190,000-200,000 units, which is still far away from what this market can actually achieve. I hope that the current government will tackle the obstacles, which are blocking the market from flourishing. GST must be brought in, transportation must be eased, investments in infrastructure must be accelerated. It is not the time for talking now, it is time for action. In just five years, China revamped its highway system, which is phenomenal. If China can do it then we should also think on similar lines quickly. Though we are the second largest democracy in the world, there’s still a long way to go. When Gujarat can do it, every other state can. There are some states in India, which are pretty close to some African countries, and there are some other states, which can compete with Asian neighbours. India can, if it has the will power.

Q. With a new 430 hp truck, are you targeting only the mining side, or also an escalation of the engine power in India which generally prefers low power trucks?

A. We are promoting a balanced upgrade of horsepower. If you notice, some of the 30-tonne vehicles have an engine capacity of 180 hp. The torque does not exceed 600Nm. This is risky; fuel consumption will be totally inferior, speed and turn around time will be affected. So we have to bring in a balanced form, which fits in India but does not slow down the traffic. We need to speed up the transportation of goods. Over 30 to 40 per cent of the agricultural production is rotting on the road, which in turn is hurting the economy. So I am not a friend of upgrading the horsepower only. For mining and special transportation it makes sense, for full roads to go from north to the south, it makes sense. Since this is now Daimler trucks Asia, Fuso as people know, is a light duty product company. Many people are not even aware that we have a heavy duty range. The heavy duty trucks we are selling in Japan are top notch. So, what do we have for Africa, for GCC, the Middle East, from South East Asia? We have nothing. This is the truck (the Thunderbolt). There, this truck will not compete in the Indian environment; it will compete in an European environment. It will compete at 360 hp; at 400 hp. The South African ask us, your engines are small; we need 500 hp. We tell them, no, that is not required. As long as I can provide 2,100 Nm of torque, you have to give me an evidence that you really need 2,300 Nm torque. The ratio for exports will be at least 70 per cent.

Q. What markets are you targeting from India?

A. We will be targeting every country except South America. For Africa, we will start directly from Kenya. We are reorganising a lot of things; we are leveraging power. I think we are a super power in innovation. You want to be in every market with a tailored concept, and India is a solution for that. We want to rise to the next level of connectivity, which is important for a lot of markets. For India it will be far more important than many things because the youth is here. The people are growing up off Apps. People are not used to what we are used to; they just over jump. In India we will see a lot of surprise in terms of technology. People will not wait. They copy what we did. They will shift faster to the next generation than we can imagine.

Q. How much have you expanded your dealer network?

A. We have 82 points of sales and close to 75 or 76 are 3S dealers. We are doing something that we call as ‘undone’ system. Here a big watch is running backwards. The production guys know exactly that we need to do this in this much time. In service, we have standardised maintenance things. Certain maintenance things. We have a big watch at the service station so that the mechanics are under pressure. This will allows to keep the things transparent. In finance we are excellent. The team is excellent. They have a market share in financing in more than 40 per cent. The customers are appreciating it. The customer has appreciated our insurance schemes. Our schemes are massively copied by our competitors even without thinking if their trucks are ready for this.

Q. What about the bus sector? Will you offer the entire bus range? Some of your buses are based on Fuso?

A. The buses are based on the medium-duty chassis and powertrain, which means Fuso based products. This includes school bus, staff bus, which will mainly be for India. We will be distributing chassis to the whole world, and this will be done under the Mercedes-Benz brand.

Q. Will it follow the same route of the BharatBenz trucks for the export market and will you sell those buses in Africa?

A. Yes, massively. But, there (in export markets) it will be less complete; it will be more chassis business. Here (in India) it will be less Fuso, and more Mercedes-Benz.

Q. How big is the bus market in India? What about the coach segment?

A. The bus market, which I see is 44,000. But, the bus market, which is 8-9 tonne, is 34,000 units. The latter is a more relevant market for us. It is certainly of interest for me. Few years ago it was close to 40,000 units. It will go up to 60,000 units as India has a huge potential for buses. There was an incident last year regarding a coach bus, which deteriorated the trust in the segment. So if we need to build this product out of India we need to rebuild the trust of the Indian customer. There is a growing demand for comfortable travel in India. Our buses will also be for export market, which may not include Europe, but indeed Taiwan and Saudi Arabia.

Q. What is the most important segment in the bus segment for you?

A. It has to be a school bus. In that segment, the security has a different factor for people to use it.

Q. They say there is a huge potential in the Indian market. What are your thoughts?

A. In the mid-term, yes. But in the long-term, this market has a potential of at least 450,000-500,000 trucks. The density of trucks is extremely low. China has 1.4 billion people, 900,000 trucks, whereas in India it is 200,000 trucks. So, even if we double up, it will still be half of where China is already. So the potential is really enormous.