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Old 10th April 2012, 19:23   #1
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Default Forbes : The German Invasion of The Indian Trucking Sector

Very interesting read, and an article by a BHPian!

Source & Full Article

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Daimler is getting ready for a full frontal attack to corner large segments of the Indian truck market, but incumbent Tata Motors isnít going to be a pushover

Itís a pity editorial policy doesnít allow un-parliamentary language. If it did, this story would be a more colourful one because Marc Llistosella (pronounced List-o-say-a) is a colourful character prone to slip often into equally colourful language. But thatís the only way he knows to be. That is also why he now has a mandate from Daimlerís headquarters at Stuttgart in Germany to put up a good fight, however bloody it gets, with Tata Motors and Ashok Leyland.

Eighty percent of all trucks sold in India are built by them. Anybody whoís tried to take this duopoly on, has until now, lost to their might. And that includes trucking majors from across the world like Volvo, MAN, and Scania. The American Navistar reckoned partnering with a local company would get it a toehold in the market, which is why it chose to partner with Mahindra. But in the two years itís been in business, itís managed to sell just about 1,500 vehicles.

And this market is made of fleet owners who have risen from the grassroots to create large businesses. They know how to run their trucks and make money, but they donít care two hoots about a global or local brand. ďEvery MNC came in with an advanced technology perspective, but failed to deliver on the price, financing options for the buyer and point of contact, which is sales and service,Ē says Deepesh Rathore, managing director, IHS Automotive, a global consulting firm.
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Old 10th April 2012, 19:30   #2
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

That Daimler means business in India is conveyed by the photograph in the page. The trucks are parked in scant disregard to the lane markings. In my opinion this picture itself is very powerful to convey Daimler's intention.

-- Wind
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Old 11th April 2012, 08:08   #3
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

It was only a matter of time until Daimler set foot into the truck zone.

Tata and Ashok Leyland sure are their competitors but only in terms of price and sales-service; I expect Daimler trucks to be far superior technically (just like Volvo buses blew away Tata and AL).

Now for a good marketing strategy.

Don't we Indians make wonderful customers!

Last edited by libranof1987 : 11th April 2012 at 08:10.
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Old 11th April 2012, 08:35   #4
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

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Originally Posted by libranof1987 View Post
Tata and Ashok Leyland sure are their competitors but only in terms of price and sales-service; I expect Daimler trucks to be far superior technically (just like Volvo buses blew away Tata and AL).
Difference: When I am travelling by bus, I want some comfort. Volvo scores. But even here, Volvo is well ahead of the Merc's, Isuzu's, & Kinglong's.

For the transportation sector, the priority is margins.
* Buying, & operating. Daimler will not score on either, compared to the desi trucks.
* Daimler trucks may help get the cargo a little quicker. But is it worth it ?
* And why should the operator buy expensive trucks for his employees ? Even for himself, he may buy a car than an expensive truck
* Even Volvo trucks can be seen in special / high tonnage applications. Bulk of TM & AL trucks are in the mid-range. Here again, costs will be important.

There is only a small % of cargo that needs to reach overnight - and these will be by air. For every thing else, time is not that much of a constraint. Why should an operator buy a Daimler ?

I dont travel every day, hence I wont mind a slightly higher price of the ticket, even if I feel it is a bit overpriced. But with the transportation sector, they will calculate every rupee, if not every paise. And for them, it is an everyday thing.

The trucks may be superior, but TM/AL trucks will score huge with their lower cost of servicing. Lots of things still going well for TM/AL.

Btw, Isuzu is going through Swaraj. Volvo did not enter where TM/AL are strong. MAN / AMW are still working on their foot-hold.

Like the article said, it will be a good fight - Daimler's plan is different.
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Old 11th April 2012, 08:59   #5
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

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* Daimler trucks may help get the cargo a little quicker. But is it worth it ?
Completely agree.

Truck operators would rather have their ancient Tata trucks pull thru' the ghats on the Mumbai-Pune Expressway at 2 km/hr than pay a lot of money just so the drivers could have it easy and the cargo delivered quick.

Daimler could find patronage from huge conglomerates who want their raw materials/goods delivered quick.
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Old 11th April 2012, 09:20   #6
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

Daimlers are ensuring correct initial steps. They are organising Road show of Bharat-Benz trucks on Mumbai-Ahemadabad section of NH-8. As part of road show they will be stopping at every possible Restaurant & Dhaba demo & test rides for real cutomers.

Recently Bharat-Benz people visited our Dhaba at Vapi & told us to reserve some space in ground on 30th April. Let's see how it goes ahead!
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Old 11th April 2012, 09:33   #7
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

All the shameless thullas / chungi nakas and all the other systemic extortion mechanisms in India ensure trucks that move at 50-60 kph are good enough. Though IMNSHO truck average speeds in India have REALLY increased last 4 years, so I think there is a market for their stuff.

I hope they are competing with an alto by introducing an alto-equivalent, an eon. An A-class may not cut it at all. 9% costlier is still ALOT of money on the table for the average customer, no? Plus the uncertainty factor of going in for an untested (repair anywhere capability) vehicle.

Or they may just be the maruti that smashed HM and PAL's monopoly stranglehold on the market.
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Old 11th April 2012, 09:46   #8
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

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.. truck average speeds in India have REALLY increased last 4 years, so I think there is a market for their stuff.
Speeds of general traffic, trucks included, may have increased - due to better roads & technology than before. But :

1. ARAI will "ensure" safer transportation by limiting top speeds of trucks too. So a Daimler/Volvo that is capable of cruising at 140 kmph, will still be limited to 80-90 ?
2. More importantly, the operators will insist on lower speeds simply because of FE.

So on these counts, all these imported trucks will lose out advantages they have due to better technology & being capable of higher speeds.
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Old 11th April 2012, 10:00   #9
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

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Originally Posted by condor View Post
Speeds of general traffic, trucks included, may have increased - due to better roads & technology than before. But :

1. ARAI will "ensure" safer transportation by limiting top speeds of trucks too. So a Daimler/Volvo that is capable of cruising at 140 kmph, will still be limited to 80-90 ?
2. More importantly, the operators will insist on lower speeds simply because of FE.

So on these counts, all these imported trucks will lose out advantages they have due to better technology & being capable of higher speeds.
That's bad..they will lose their right for the fast lane. I do hope we get magic buttons on our cars to make the slow moving Tata & AL trucks vanish from the fast lanes.
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Old 11th April 2012, 11:10   #10
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

Quote:
Originally Posted by condor View Post
Speeds of general traffic, trucks included, may have increased - due to better roads & technology than before. But :

1. ARAI will "ensure" safer transportation by limiting top speeds of trucks too. So a Daimler/Volvo that is capable of cruising at 140 kmph, will still be limited to 80-90 ?
2. More importantly, the operators will insist on lower speeds simply because of FE.

So on these counts, all these imported trucks will lose out advantages they have due to better technology & being capable of higher speeds.
Even in speed-friendly Germany most trucks are restricted to 80 kmph (or is it 100?) on the A-bahns. Its not the top speed, but the ability to cruise at these speeds even when gradients are encountered & the ability to accelerate to these cruise speeds after braking that contribute to quick turnaround times. And its not just powerful engines but a combination of power-train, vehicle design, braking & suspension systems that work in tandem to make this kind of driving possible.


Quote:
Originally Posted by condor View Post
For the transportation sector, the priority is margins.
* Buying, & operating. Daimler will not score on either, compared to the desi trucks.
Ive read on this very forum that DICV is likely to price its products with a 'less than 10%' premium over comparable Desi models. Plus a 10% increase in Fuel economy over the same. Considering that fuel cost is the biggest contributor to operating costs - a 10% FE improvement is a compelling argument, even if the initial purchase cost is higher. Plus its likely that the trucks will run much further than the desi trucks before the need for major overhauls.

Quote:
Originally Posted by condor View Post
* Daimler trucks may help get the cargo a little quicker. But is it worth it ?

There is only a small % of cargo that needs to reach overnight - and these will be by air. For every thing else, time is not that much of a constraint. Why should an operator buy a Daimler ?
While consumers may not care if a consignment reaches its destination a few hours later, for operators one can only assume that quick turn around times (more trips per month, assuming there is sufficient demand to be satisfied) can only be good for business.


Quote:
Originally Posted by condor View Post
Btw, Isuzu is going through Swaraj. Volvo did not enter where TM/AL are strong. MAN / AMW are still working on their foot-hold.

Like the article said, it will be a good fight - Daimler's plan is different.
TML & AL are certainly well placed to defend their turf. I just hope that the war is fought on the basis of sustainable strategies and not on price-cuts, which will be detrimental for the segment in the long run.
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Old 11th April 2012, 11:31   #11
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

I dont think they will impact TA/ AL trucks in anyways. However guess they may get foothold in some niche segment. Like, volvo's sell only fraction of buses sold by TA/ AL, however in long distance travel they have opened up new market.

The same way, MAN trucks are now becoming a familiar site in construction sites in Bangalore. Their multiaxle tipper trucks can be seen here in quiet good numbers. May be the Germans open up a new segment this way, TA / AL trukcs will for sure the market leaders for many years to come. May be down the lane they too come out with better designed trucks.

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Originally Posted by zalaps View Post
Recently Bharat-Benz people visited our Dhaba at Vapi & told us to reserve some space in ground on 30th April.
Waiting for pics of the same , and a review too may be
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Old 11th April 2012, 11:46   #12
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

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.. - a 10% FE improvement is a compelling argument, even if the initial purchase cost is higher. Plus its likely that the trucks will run much further than the desi trucks before the need for major overhauls.

While consumers may not care if a consignment reaches its destination a few hours later, for operators one can only assume that quick turn around times (more trips per month, assuming there is sufficient demand to be satisfied) can only be good for business.
Fuel is the biggest component of running costs. Will these trucks take the same abuse as the desi trucks - in the form of adulterated fuel, lower grade oil etc ? There will be other input costs that will contribute to the running costs, that will make the TM/AL look more VFM/ cost effective.

But when the overhauls come in, what will be the cost of overhauling a Daimler vs TM/AL ?

The operator may do a quick turnaround for one truck to do more trips, but when will he break-even for his higher purchase cost ? Remember, he is normally not going to get paid extra for sending the cargo on a Daimler than he will get if he used a TM/AL. Nor will he get better paid if delivers it faster.


You should study the approach that Maersk used to beat the market. They actually offered better rates for cargo that did not have to reach in normal time, but can be delivered in a little more time (of course, not indefinite . This way they ensured that their ships & containers were used to the full, and they were able to plan their trips much better.
Similarly here - why deliver sooner than the standard time for the market, when you dont get paid higher ? And that too with additional investments ?

Quote:
Originally Posted by mpksuhas View Post
I dont think they will impact TA/ AL trucks in anyways. However guess they may get foothold in some niche segment.

The same way, MAN trucks are now becoming a familiar site in construction sites in Bangalore.
+1
Having said that, I still feel they will have a market in niche areas - like MAN did in construction. Or Volvo in the extra heavy vehicle category.
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Old 11th April 2012, 11:49   #13
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

I never wanted to be employed in India since my return from the US because I have hang ups about the Indian professional environment but this Llistosella as described in the article makes me want to work for this guy. Thats just the kind of leader that gets me charged up. I'd work for free for him!
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Old 11th April 2012, 13:52   #14
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

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Originally Posted by Bharat Benz
Come to think of it, he says, these aren’t virtues. “What kind of trucks do you build that breaks down so often that it needs to be serviced so often and spares need to be available at every paan shop?” he asks. His contention is a simple one. Trucks built in India are not reliable. And that is why you need a support station every 100 kilometres. So what do you do? Build reliable trucks that don’t break down. As simple as that!
Yeah, this is coming from a European auto manufacturer!
What happens when the truck does breakdown?
(You know you have to honk every minute/second - your horn would breakdown if made according to EUR specs)
The owner pays through nose?

India is price driven market, not "pseudo-value"* driven.


*Pseudo-value = sales pitch, which sales folk believe will add value to the customer, but actually does little. Customer is well aware (or becomes well aware in due course) and thus doesn't pay any premium.
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Old 11th April 2012, 13:56   #15
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Default Re: Forbes : The German Invasion of The Indian Trucking Sector

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Originally Posted by condor View Post

The operator may do a quick turnaround for one truck to do more trips, but when will he break-even for his higher purchase cost ?

Similarly here - why deliver sooner than the standard time for the market, when you dont get paid higher ? And that too with additional investments ?
Not to sound argumentative, but more trips per month = higher revenue. And if the purchase price is less than 10% over a standard truck AND there is a 8-10% fuel efficiency improvement, which by the way is a huge improvement, - an operators break even point may not be that different than with a conventional truck. Not sure of the shipping Industry, but I doubt if the trucking sector can emulate a 'pay less for potentially slower service' option. Unless there is a high percentage of trucks plying with partial loads that couldve been converted to full loads by waiting for additional consignments to maximize loading.

Your observation that a service provider cannot charge more 'per-km' on account of premium branded trucks is absolutely correct. Unlike the passenger sector where an operator can charge higher for a Volvo bus on account of passenger comfort (and reduced travel time).
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