Q & A
Harrie Schippers, President, DAF Trucks NV
Interview by: Gianenrico Griffini
Q. How was the year that went by for DAF Trucks?
A. The year 2015 was a year of growth. With a growing 2015 heavy duty market share in Europe, we are on track towards our mid-term objective of 20 per cent. And also outside Europe where we will further expand our presence with focus on demanding markets with modern emission standards..
Q. Does the reduction in diesel price hold a key to growth?
A. Customers are benefitting from the low diesel price, and interest rates are low. That makes it attractive to invest in new Euro 6 trucks, with 5 per cent better fuel economy, proven reliability and higher resale values. All customers I spoke with recently have already completely switched to Euro 6 or are in the process of doing so. That is good for all parties as well as for the environment. All incentives that we can come up with in Europe that help people replace older trucks with newer trucks, have the biggest impact for the environment.
Q. How has DAF benefitted from the growing market?
A. DAF has benefited from the larger market. Over 30 per cent more orders were received by DAF last year for the CF and XF models compared to 2014, the highest number since 2007. To meet the high demand, production in Eindhoven (Netherlands) was increased in just four months by 50 per cent. Production has never risen so quickly, and it is a great achievement therefore. In the last three months of the year, a total of 11,500 trucks were produced in Eindhoven, which is a new quarterly record. We produced almost 41.000 CF and XF trucks last year and around 9,700 LF vehicles.
Q. To what extent has your market share in Europe risen?
A. European market share in the over 16-tonne class rose from 13.8 per cent in 2014 to 14.6 per cent last year. Our market share grew in almost all main markets in Europe. We grew more than one per cent in the United Kingdom and Czech Republic; one per cent in Spain, and we gained almost a full per cent in the Netherlands and Poland. Very important is the progress realised in Germany, where our market share grew to 10.8 per cent. Germany is by far Europe’s largest truck market and we need further growth there in order to achieve our objective of 20 per cent heavy duty share in Europe in the mid-term. The CF and XF were successful and contributed to the rise in market share. Both these truck became an additional 5 per cent fuel efficient thanks to engine innovations and new technologies such as predictive cruise control, predictive shifting and eco mode. New silent versions allow transport operators to continue distribution in areas where noise restrictions apply. Helping our customers to achieve the highest yield per kilometer, totally in line with the philosophy of DAF Transport Efficiency, our trucks currently are the most fuel efficient ever. They are also of the highest quality ever.
Q. What about emissions and the costs involved?
A. What we try to explain in Brussels is that we as an industry don’t need legislation to reduce CO2 emission. It is directly linked to fuel consumption. We simply deliver the lowest fuel consumption automatically because our customers ask for it. On top of that, more and more people in Brussels start to understand that it is very complex to make general legislation, and also because every truck is different. The Vecto tool to be introduced in 2018 gets a lot of attention now and the way we are going to declare CO2 emission on a comparable, auditable and verifiable basis will further strengthen market forces and make all manufacturers run even harder. The industry will invest enormously in future to make trucks even more fuel efficient and cleaner. Nevertheless, it is good to question whether we should spend so much efforts and cost on reducing CO2 emission from trucks. All future technologies needed to take the next step will cost our customers in the region of Euro 300 to save one tonne of CO2, whereas on the free market you can still buy emission rights for only Euro 6 per tonne. There’s a need to think about that.
“In line with the philosophy of DAF Transport Efficiency, our trucks currently are the most fuel efficient ever, and also of the highest quality ever.”
Q. Beyond Europe, what are the markets where you are marking your presence?
A. Last year, DAF entered the Malaysian and Colombian markets. In Taiwan, our partner Formosa opened a new assembly plant to double production capacity. With a market share of 17.8 per cent DAF is the largest European truck brand in Taiwan. In Brazil, the plant in Ponta Grossa will soon ramp up production. Although the economy is in a severe recession and competitors are reducing their production, we are working on further growth. It is difficult to forecast sales in Russia. The Ruble is very weak and that makes European trucks very expensive in Russia.
Q. How do you look at the DAF footprint as of current?
A. One has to be realistic. First and foremost, we apply a stepby- step approach and aim for sustainable growth. You cannot enter all marketplaces and be successful in all of them in one go. For DAF, good markets are the markets with a professional transportation system and modern emission standards. We closely monitor developments in China and India but we all know that there is no focus yet on total costs of operation like for instance in Brazil, South Africa, New Zealand, Australia and Taiwan. Truck prices in China and India vary from Euro 30 to Euro 40,000. We closely follow the developments there.
Q. How do you look at 2016?
A. This year, the recovery of world economy is expected to continue cautiously. Growth of the European economy is expected to be almost 2 per cent. Despite the unrest in the Middle East, oil prices remain at a low level. With the economic recovery, transport volumes are likely to remain at a good level, with a slight growth in the truck market as a result. For 2016, it is anticipated that the European market for heavy trucks will be between 260 and 290,000 units. The year 2016 could be the best market since 2008. And yes, the market is at a sustainable level, at or even above what under normal economic situations would be a replacement market. However, I don’t have a crystal ball, and it depends very much on how the economy develops.
Q. Will good growth come from
rigid and tractor segment?
A. Despite how the market
fares, our ambition is to grow in
both the tractor and the rigid
segment. In tractors we enjoy
a very strong position indeed.
In the last quarter of last year,
our growth in the rigid segment
was stronger. I always say that
the first 2.5 m of tractors and
rigids are same, and 80 per cent
of the value is there. In markets
where we are the market leader,
our market share in rigids is
higher than in tractors. Many
new markets, like Poland, Czech
Republic and Hungary are real
tractor markets. Tractors are used
for international transportation,
in which competition is the
most severe. I’m proud that DAF
performs best here. We have
many programmes in place to
further grow in rigids and we
are making good progress. But
when we are at 20 per cent
market share in Europe on the
mid-term, we will still be stronger
in tractors. Our objective for this
year is to carve out a 16 per cent
share in the heavy-truck class.
Q. Is the capacity expansion continuing in 2016?
A. We are having a large number of investment projects running in 2016. These include the construction of the new cab paint shop in Westerlo (Netherlands) involving an amount of Euro 100 million. In addition, tens of millions will be invested in Eindhoven for the production of new gear wheels; in a new large press in the sheet metal components plant, and in a new production line for cylinder blocks and cylinder heads. All these major investments illustrate confidence in the future of our factories in Eindhoven and Westerlo. All these investments are done to be ready for the future. I have strong confidence in the future, thanks to the best and most efficient trucks we have come to offer, that we have developed, manufactured and marketed. The trucks have been developed manufactured and marketed by over 8,000 dedicated DAF employees, and by over 1,000 dealers in Europe and across other markets.
Q. As a Paccar Group entreprise, what synergies are you looking forward to? There’s also the Kenworth and Peterbilt brands?
A. I will not be able to give you an example. Think about electronics and driver assistance systems. Sharing a cab is difficult as legislations differ across continents. Driveline synergies are possible only up to a certain level. You are aleady aware that 40 per cent of the Kenworth and Peterbilt trucks in North America are running with the Paccar MX engine, developed by DAF in Eindhoven. We have just launched the MX-11 engine in the US, and I expect this to become as successful as it is in Europe.
Trendline
For DAF, good markets are the markets with a professional transportation system and modern emission standards.
