Daimler India Commercial Vehicles Pvt. Ltd. Power Ahead
Power Ahead - An outlook on the Indian trucking industry Marc Llistosella – CEO & MD Daimler India Commercial Vehicles
Daimler India Commercial Vehicles Pvt. Ltd. DICV/Llistosella, February 2013 Datum (Tag.Monat.Jahr)
Daimler India Commercial Vehicles Pvt. Ltd.
Truck Industry was dominated by Triad markets in the last decade, the future will be BRIC markets Unit Sales, by market (%)
Revenue, by market (%)
Profits, by market (%)
30%
29%
37%
58%
48%
In Mio Units, GVW >3.5t
2,80
4,80
6,80
17%
22%
33%
56% 74%
73%
63%
78%
56%
49%
14%
18%
13% 8%
13%
15%
2010
2020E
2000
2010
2020E
33% 11%
10%
15%
15% 11%
2000
2010
2020E
2000
Triad
BRIC
All Other
Major Players Llistosella, Feb 2013
Triad - North America, Western Europe, Japan
2
Daimler India Commercial Vehicles Pvt. Ltd.
GDP growth of emerging economies outperformed Western markets
Llistosella, Feb 2013
3
Daimler India Commercial Vehicles Pvt. Ltd.
India expected to follow footsteps of peer and developed markets in terms of volumes & technology >5t Truck Sales (in ’000 units for 2011)
INDIA - 2030 CHINA
1000
INDIA - 2025
750
No
ine L al m r
India will gradually catch up with the Normal Line
500
INDIA - 2020
UNITED STATES INDIA 250
BRAZIL
RUSSIA INDONESIA
GERMANY
Population (in 2011, estimates in millions)
0 JAPAN
200
400
600
800
1000
1200
Indian truck market will normalize in volumes by 2030 Llistosella, Feb 2013
4
Daimler India Commercial Vehicles Pvt. Ltd.
Market conditions have put together a storm for the Indian truck industry Economies in triad markets cool down, affecting India’s businesses as well…. GDP Growth %
GDP Growth %
1,5 4,8
2,2
1,8
India’s economical growth cooled down and expected to remain flat….
-0,3 Europe
4,9
8,20
7,50
Asia
US 7,5 2011
2012
10
India
Raw Material 32
35
44
5,50
5,30
5,40
Q1 ’12
Q2 ’12
Q3 ’12
Q4E ’12
5,5
Further cost factors hit the CV industry severely … Finance
5,30
Cost 50
Freight Rate
11
CV Industry dips in 2012, flat growth in 2013 expected… CAGR
In ‘000 Units
+10%
30
-12%
9% -13%
6%
331
27
290
280
363
386
2014E
2015E
240 Bank Rate
Steel In INR per kg
Diesel In INR per ltr
INR/km Rates for Delhi-Mumbai for 25t GVW truck as of Q3, ‘11 vs ‘12
2011
2012
2013E
Conservative Scenario Llistosella, Feb 2013
5
Daimler India Commercial Vehicles Pvt. Ltd.
Major macro economical factors directly impacting the Indian transport industry Economy • With recent global developments contributing to a significant rebalancing of portfolios the Indian macroeconomic environment has looked turbulent during the past year • Gradually, high levels of inflation gave way to a slow-down in the growth
Regulation • Political logjam in reforms, e.g. FDI in Multi Brand Retail, mining licensing and missing economic revival policies avoid the Indian Economy to get back on the path to stable growth • Scams in mining identified by CAG (Comptroller & Audit General, Govt. of India) hampering automobile sales in this segment
Cost
• Fuel price hike, raw material and financing cost increase add burden to transport industry • Increased cost have only partially being able to be passed on, as cargo availability remains limited • Sharp fall in commercial vehicle sales for 5 – 49tonne, 15% in 2012
Sales
• The drop in output from all sectors continues to impact the cargo availability in the market, keeping freight rates under pressure
Discounts • Reduced sales & inventory pile up forces OEMs to curtail production and increase discounts • Peak levels of discounts up to 25% compared to earlier 3% Llistosella, Feb 2013
6
Daimler India Commercial Vehicles Pvt. Ltd.
News snapshots proving sluggish truck industry scenario in India
Llistosella, Feb 2013
7
Daimler India Commercial Vehicles Pvt. Ltd.
Segment shifts till 2020 likely to favor better TCO and value added products 2020
2013
L/MDT
16t-R 15t 13t 12t 9t
M/HDT-R
37t-R 31t-R 25t-R 16t-R
M/HDT-C
31t-C 25t-C
16t-C Llistosella, Feb 2013
Reasons…. • Growth in 15t • Stabilization in 13t and 9t volumes; 13t to be used mainly for Inter-State movement while 9t to be limited to light goods and refrigerated containers (Cool Box Trucks) • 16t-R and 12t to decline further • Growth in 37t; Cement and Steel segment to 37t-C • Stabilization in 31t-R volumes; Parcel, Tankers, Containers to remain with 31t-R • 25t-R and 16t-R to decline further; 25t-R to get limited to light goods and auto carriers; 16t-R to be limited to hill applications and construction material in intra-city usage • Growth in 31t-C segment. With 280hp segment evolving; deep mining (coal and iron-ore) to shift from current 25t-C to 31t-C • 25t-C to be limited to road construction, sand / lignite mining and concrete boom pumps • 16t-C to be limited to municipal applications and hilly applications
Evolving Concepts….
Refrigerated Trucks
Car Carriers
Concrete Boom Pumps 8
Daimler India Commercial Vehicles Pvt. Ltd.
Aggressive discounts affects resale value and asset loss to fleet owners Aggressive discounts by OEMs upto 25% In ‘000 INR
Leading OEM 3123R - Cab Chassis
2.083
demand for used trucks, consequently
-19% 1.733
350
• Declining new CV sales usually results in
New OEM 3123R - Cab Chassis
-17% 2.135
1.735
400
Effect of high discounts….
leading to higher Residual Values (RV) • However due to the recent uncontrolled
List Price Discount
RTP*
List Price Discount
RTP*
Deterioration of used vehicle prices due to discounts
discounts given on new CV's sales, used truck RV's have been deteriorated • Fleet owners have to endure an asset
In ‘000 INR e.g. 1 – 2518, 2011 Model
e.g. 2 – 2214, 2009 Model
-12%
-17%
1.300
RV Llistosella, Feb 2013
1.150
1.150
Current RV
RV
loss of 12 - 18% on their fleets, due to the recent pricing policies
950
Current RV
* RTP – Retail Transaction Price
• High discounts destruct established brand values and lead to pure pricedecisions
9
Daimler India Commercial Vehicles Pvt. Ltd.
But in the long term….India is progressing towards modern trucking and catching up with global trends Need for Modern Truck Increase in cost of raw materials
Changing Technology Dynamics
Benefits of Modern Truck
Share of M/HDT Market
• Better Cost of ownership
• BS IV emission complaint Stringent Emission norms
• Higher engine power and durable power train
Better Infrastructure
• Faster turn around time Increasing fuel prices
• Better cabin comfort 2012
Higher driver comfort Llistosella, Feb 2013
2020E
Emerging modern trucking segment globally
• Increased warranty periods 10
Daimler India Commercial Vehicles Pvt. Ltd.
The brand that delivers it all…. Total Cost Cost of of Ownership Ownership (TCO) (TCO) Total Best in in class class fuel fuel efficiency efficiency ••Best Longer service service intervals intervals -- less less cost cost of of maintenance maintenance ••Longer
High Quality Quality && Reliability Reliability High Aggregate life life design design -- best best among among competitors competitors ••Aggregate
High Driveability Driveability and and Safety Safety High Drive ergonomics ergonomics benchmarking benchmarking in in industry industry ••Drive Design meeting meeting coming coming norms norms on on cabin cabin safety safety && ••Design others others
Path Breaking Breaking Performance Performance Path Total performance performance ahead ahead of of existing existing products products ••Total in India in India
… made in India for India Llistosella, Feb 2013
11
Daimler India Commercial Vehicles Pvt. Ltd.
DICV is established, offering the full truck range and covering the complete value chain
Products Product developed Double digit fuel efficiency to competitors Homologation 1st type approval certificates received Documentation 100% Blank release for Wave1 SOP 7t~49t Range Trucks developed in India for India
Llistosella, Feb 2013
Plant Facility - Test Trucks completed 7.5 mio km Plant Production facility ready, customer trials done, LDT and HDT start of production done
>1.5 mio square feet Production facility for powertrain and truck assembly
Supplier Procurement Stable procurement processes installed
Network
Network 30 dealers will cover 91% of TIV via 109 locations. 32 locations Supplier Management ready & ~1,500 Micro tracking vehicles sold 220 tier1 suppliers Retail Finance Logistics Established Captive, Defined logistical tied up with major CV methods established financers 85% Pan India Localization Network Established and Full supply chain with activated in phased over 400 suppliers approach
Organization IT Integrated IT with more than 60 systems Human Resource 1,950 employees on board Compliance Effective measures installed 4,000 Jobs Complete truck organization with best Indian talent 12
Daimler India Commercial Vehicles Pvt. Ltd.
Thank you…
Llistosella, Feb 2013
13
Daimler India Commercial Vehicles Pvt. Ltd. DICV/Llistosella, February 2013 Datum (Tag.Monat.Jahr)
Daimler India Commercial Vehicles Pvt. Ltd.
Truck Industry was dominated by Triad markets in the last decade, the future will be BRIC markets Unit Sales, by market (%)
Revenue, by market (%)
Profits, by market (%)
30%
29%
37%
58%
48%
In Mio Units, GVW >3.5t
2,80
4,80
6,80
17%
22%
33%
56% 74%
73%
63%
78%
56%
49%
14%
18%
13% 8%
13%
15%
2010
2020E
2000
2010
2020E
33% 11%
10%
15%
15% 11%
2000
2010
2020E
2000
Triad
BRIC
All Other
Major Players Llistosella, Feb 2013
Triad - North America, Western Europe, Japan
2
Daimler India Commercial Vehicles Pvt. Ltd.
GDP growth of emerging economies outperformed Western markets
Llistosella, Feb 2013
3
Daimler India Commercial Vehicles Pvt. Ltd.
India expected to follow footsteps of peer and developed markets in terms of volumes & technology >5t Truck Sales (in ’000 units for 2011)
INDIA - 2030 CHINA
1000
INDIA - 2025
750
No
ine L al m r
India will gradually catch up with the Normal Line
500
INDIA - 2020
UNITED STATES INDIA 250
BRAZIL
RUSSIA INDONESIA
GERMANY
Population (in 2011, estimates in millions)
0 JAPAN
200
400
600
800
1000
1200
Indian truck market will normalize in volumes by 2030 Llistosella, Feb 2013
4
Daimler India Commercial Vehicles Pvt. Ltd.
Market conditions have put together a storm for the Indian truck industry Economies in triad markets cool down, affecting India’s businesses as well…. GDP Growth %
GDP Growth %
1,5 4,8
2,2
1,8
India’s economical growth cooled down and expected to remain flat….
-0,3 Europe
4,9
8,20
7,50
Asia
US 7,5 2011
2012
10
India
Raw Material 32
35
44
5,50
5,30
5,40
Q1 ’12
Q2 ’12
Q3 ’12
Q4E ’12
5,5
Further cost factors hit the CV industry severely … Finance
5,30
Cost 50
Freight Rate
11
CV Industry dips in 2012, flat growth in 2013 expected… CAGR
In ‘000 Units
+10%
30
-12%
9% -13%
6%
331
27
290
280
363
386
2014E
2015E
240 Bank Rate
Steel In INR per kg
Diesel In INR per ltr
INR/km Rates for Delhi-Mumbai for 25t GVW truck as of Q3, ‘11 vs ‘12
2011
2012
2013E
Conservative Scenario Llistosella, Feb 2013
5
Daimler India Commercial Vehicles Pvt. Ltd.
Major macro economical factors directly impacting the Indian transport industry Economy • With recent global developments contributing to a significant rebalancing of portfolios the Indian macroeconomic environment has looked turbulent during the past year • Gradually, high levels of inflation gave way to a slow-down in the growth
Regulation • Political logjam in reforms, e.g. FDI in Multi Brand Retail, mining licensing and missing economic revival policies avoid the Indian Economy to get back on the path to stable growth • Scams in mining identified by CAG (Comptroller & Audit General, Govt. of India) hampering automobile sales in this segment
Cost
• Fuel price hike, raw material and financing cost increase add burden to transport industry • Increased cost have only partially being able to be passed on, as cargo availability remains limited • Sharp fall in commercial vehicle sales for 5 – 49tonne, 15% in 2012
Sales
• The drop in output from all sectors continues to impact the cargo availability in the market, keeping freight rates under pressure
Discounts • Reduced sales & inventory pile up forces OEMs to curtail production and increase discounts • Peak levels of discounts up to 25% compared to earlier 3% Llistosella, Feb 2013
6
Daimler India Commercial Vehicles Pvt. Ltd.
News snapshots proving sluggish truck industry scenario in India
Llistosella, Feb 2013
7
Daimler India Commercial Vehicles Pvt. Ltd.
Segment shifts till 2020 likely to favor better TCO and value added products 2020
2013
L/MDT
16t-R 15t 13t 12t 9t
M/HDT-R
37t-R 31t-R 25t-R 16t-R
M/HDT-C
31t-C 25t-C
16t-C Llistosella, Feb 2013
Reasons…. • Growth in 15t • Stabilization in 13t and 9t volumes; 13t to be used mainly for Inter-State movement while 9t to be limited to light goods and refrigerated containers (Cool Box Trucks) • 16t-R and 12t to decline further • Growth in 37t; Cement and Steel segment to 37t-C • Stabilization in 31t-R volumes; Parcel, Tankers, Containers to remain with 31t-R • 25t-R and 16t-R to decline further; 25t-R to get limited to light goods and auto carriers; 16t-R to be limited to hill applications and construction material in intra-city usage • Growth in 31t-C segment. With 280hp segment evolving; deep mining (coal and iron-ore) to shift from current 25t-C to 31t-C • 25t-C to be limited to road construction, sand / lignite mining and concrete boom pumps • 16t-C to be limited to municipal applications and hilly applications
Evolving Concepts….
Refrigerated Trucks
Car Carriers
Concrete Boom Pumps 8
Daimler India Commercial Vehicles Pvt. Ltd.
Aggressive discounts affects resale value and asset loss to fleet owners Aggressive discounts by OEMs upto 25% In ‘000 INR
Leading OEM 3123R - Cab Chassis
2.083
demand for used trucks, consequently
-19% 1.733
350
• Declining new CV sales usually results in
New OEM 3123R - Cab Chassis
-17% 2.135
1.735
400
Effect of high discounts….
leading to higher Residual Values (RV) • However due to the recent uncontrolled
List Price Discount
RTP*
List Price Discount
RTP*
Deterioration of used vehicle prices due to discounts
discounts given on new CV's sales, used truck RV's have been deteriorated • Fleet owners have to endure an asset
In ‘000 INR e.g. 1 – 2518, 2011 Model
e.g. 2 – 2214, 2009 Model
-12%
-17%
1.300
RV Llistosella, Feb 2013
1.150
1.150
Current RV
RV
loss of 12 - 18% on their fleets, due to the recent pricing policies
950
Current RV
* RTP – Retail Transaction Price
• High discounts destruct established brand values and lead to pure pricedecisions
9
Daimler India Commercial Vehicles Pvt. Ltd.
But in the long term….India is progressing towards modern trucking and catching up with global trends Need for Modern Truck Increase in cost of raw materials
Changing Technology Dynamics
Benefits of Modern Truck
Share of M/HDT Market
• Better Cost of ownership
• BS IV emission complaint Stringent Emission norms
• Higher engine power and durable power train
Better Infrastructure
• Faster turn around time Increasing fuel prices
• Better cabin comfort 2012
Higher driver comfort Llistosella, Feb 2013
2020E
Emerging modern trucking segment globally
• Increased warranty periods 10
Daimler India Commercial Vehicles Pvt. Ltd.
The brand that delivers it all…. Total Cost Cost of of Ownership Ownership (TCO) (TCO) Total Best in in class class fuel fuel efficiency efficiency ••Best Longer service service intervals intervals -- less less cost cost of of maintenance maintenance ••Longer
High Quality Quality && Reliability Reliability High Aggregate life life design design -- best best among among competitors competitors ••Aggregate
High Driveability Driveability and and Safety Safety High Drive ergonomics ergonomics benchmarking benchmarking in in industry industry ••Drive Design meeting meeting coming coming norms norms on on cabin cabin safety safety && ••Design others others
Path Breaking Breaking Performance Performance Path Total performance performance ahead ahead of of existing existing products products ••Total in India in India
… made in India for India Llistosella, Feb 2013
11
Daimler India Commercial Vehicles Pvt. Ltd.
DICV is established, offering the full truck range and covering the complete value chain
Products Product developed Double digit fuel efficiency to competitors Homologation 1st type approval certificates received Documentation 100% Blank release for Wave1 SOP 7t~49t Range Trucks developed in India for India
Llistosella, Feb 2013
Plant Facility - Test Trucks completed 7.5 mio km Plant Production facility ready, customer trials done, LDT and HDT start of production done
>1.5 mio square feet Production facility for powertrain and truck assembly
Supplier Procurement Stable procurement processes installed
Network
Network 30 dealers will cover 91% of TIV via 109 locations. 32 locations Supplier Management ready & ~1,500 Micro tracking vehicles sold 220 tier1 suppliers Retail Finance Logistics Established Captive, Defined logistical tied up with major CV methods established financers 85% Pan India Localization Network Established and Full supply chain with activated in phased over 400 suppliers approach
Organization IT Integrated IT with more than 60 systems Human Resource 1,950 employees on board Compliance Effective measures installed 4,000 Jobs Complete truck organization with best Indian talent 12
Daimler India Commercial Vehicles Pvt. Ltd.
Thank you…
Llistosella, Feb 2013
13
