[Jai_SJ]

Originally Posted by Ashley2

Daimler is currently offering products marginally higher than competition price. This may be penetration strategy. In many case, this has worked but not largely, especially in case of bulk deals. Also currently BharatBenz is largely betting on total cost of ownership - this includes fuel performance, maintenance cost etc, and is claiming it will be much lesser than others. While this may be true with some customers, other way when it flips, the total loyalty on brand reduces and brings them in line with current competition. Now competition is waiting at the door step with same products which they are using it for years with better discounts. And that sounds better for customers.

I agree that selling vehicles on Total Cost of Ownership (TCO) basis is a fairly risky strategy, but if successful can kill brand loyalty to TML & AL faster than any other short term measure like discounts. Both BB and VE have started dedicated driver training and field establishment programs where master drivers are accompanying the customer driver with loads on their actual routes during the first few journeys to establish fuel/vehicle performance. The customer thus sees with his eyes what the vehicle when properly driven can deliver in terms of turnaround and fuel average.

The major constraint that the new players have faced is while on all trunk routes the mileage for most TML and AL vehicles is well established, drivers have been playing with fleet owners saying the newer players are no better and pocketing the saving. This kind of training cum establishment excercise is ensuring, or at least it meant to ensure that the savings get parked in the pocket of the fleet owner as he is the one going to decide which vehicle to buy next.

The market is wide open, all the major players have large corporate backing and deep pockets, so the battle has only just began...

[hubolt]

Originally Posted by Ashley2

Other point is, even with current price Daimler may not sustain for a long time and will definitely need to increase for which competition is moving against.

Yes it's definitely a waiting game. But how much more can Ashok Leyland sustain ? Eicher is also trying to foray into M&HCV now in a big way. Their game may not be as discount friendly now saddled with Volvo technology costs and high investments as it was before when they were the discount kings. Tata Motors must have gone to the club.

[Ashley2]

Originally Posted by Jai_SJ

I agree that selling vehicles on Total Cost of Ownership (TCO) basis is a fairly risky strategy, but if successful can kill brand loyalty to TML & AL faster than any other short term measure like discounts. Both BB and VE have started dedicated driver training and field establishment programs where master drivers are accompanying the customer driver with loads on their actual routes during the first few journeys to establish fuel/vehicle performance. The customer thus sees with his eyes what the vehicle when properly driven can deliver in terms of turnaround and fuel average.

But driver training is nothing new and others are having trainers in every region. They do travel with the customer vehicle and establish the fuel performance. Infact corporate logistics like VRL have their own set of driver trainers as well. But in many cases, the fuel performance gets reduced after a couple of trips, post training and there is lot of reasons as well including steady state speed as demonstrated by trainers. Infact with BharatBenz currently taking the drivers to test track and proving fuel performance criticism is slightly higher (may be limited to few / Chennai customers). But other way, as quoted if TCO gets established then that will be a different ball game as well. And with that in place, we can see some market share correction in another 15 to 18 months.

Originally Posted by Jai_SJ

...
The market is wide open, all the major players have large corporate backing and deep pockets, so the battle has only just began...

Originally Posted by hubolt

Yes it's definitely a waiting game. But how much more can Ashok Leyland sustain ? Eicher is also trying to foray into M&HCV now in a big way. Their game may not be as discount friendly now saddled with Volvo technology costs and high investments as it was before when they were the discount kings. Tata Motors must have gone to the club.

Yes, its true that current situation is really bad and any move is affecting financially. Infact as rightly pointed by hubolt about Ashokleyland - EML has RE and TML has JLR to deepen their pockets and left out is only AL. May be as a group every one is insulated by still, as a matter of P&L account the former two are better.

[teamveevee]

Originally Posted by Ashley2

EML has RE and TML has JLR to deepen their pockets and left out is only AL. May be as a group every one is insulated by still, as a matter of P&L account the former two are better.

AL has the backing of (in)famous Hinduja Group. Now AL is one of the flagship companies of the Hinduja Group based in London. As a group Hindujas has deep pockets too. The only issue is, what is the ROI for the parent group? If they are sure, they can recover the investment over a period of time, definitely they will invest.

[vinjosep]

Source:TOI

Daimler’s India truck business financially ‘sick’:

World's largest truck maker Daimler AG's Indian operations have become financially "sick". Massive slowdown in truck sales has resulted in erosion of net worth of Daimler India Commercial Vehicles' (DICV), the wholly owned subsidiary of Daimler AG.

The company, it is learnt, has made a filing with the Bureau for Industrial and Financial Reconstruction (BIFR). Financial numbers on the company's revenues and net worth erosion were not available. "DICV is following the Indian statutory process. However, since DICV is a 100% wholly owned subsidiary of Daimler AG, the primary purpose of the regulation is not applicable as DICV has no local shareholders in India," a DICV spokesperson told TOI.

I can't make sense out of this. Why declare sick unless you need some sort of protection?

Anyways does paint a gloomy picture about the industry as such.

[TheARUN]

I don't think this news article is about Bharat Benz, they walked into the market with their eyes open wide, I don't see them sinking so soon. This I think has more to do with the Mercedes Benz bus business that they run partnering with Sutlej

[Ashley2]

Originally Posted by vinjosep

I can't make sense out of this. Why declare sick unless you need some sort of protection?

Anyways does paint a gloomy picture about the industry as such.

Originally Posted by TheARUN

I don't think this news article is about Bharat Benz, they walked into the market with their eyes open wide, I don't see them sinking so soon. This I think has more to do with the Mercedes Benz bus business that they run partnering with Sutlej

Some clarifications below:

BIFR is a Govt body which takes such filings under two categories.

Under chapter 7 : Filing under this clause is a clear case of bankruptcy wherein the Company approaches the Govt for a direct recovery protection from the shareholders. This means, company declares stoppage of all operations and generation of any further revenue, freezing book of accounts and financials. Further proceedings will be from the side of Govt wherein the company will be taken under receivership for liquidation and clearance of debts.

Under chapter 11 : Filing under this section is a declaration of financial crisis within the company and seeking protection from bankruptcy and protection from creditors. This gives a leverage that the creditors cannot file case against the company incase of defaulting of their receivables from the company. This is a natural process of financial restricting in the company and a common procedure in Europe and US. But this is considered as a slip towards chapter 7 in India since the corporate credibility gets questioned by the stake holders.

Now, the current case of DICV is as mentioned in #2.
Legally the company is eligible to continue its operations and restructure internally on the books. But the external sentiments may hunt them since our market and stake holder approaches are very different from Europe and US. Hence this can be considered as a suicidal decision. Also considering the lethargy of Govt burocratic system of our country, withdrawal from this section will take its-own time. Till then they cannot show any profits.

This is one part, but the other side is DICV is a part of Asia Business and they are more prominent to exports, especially African continent and ASEAN (India like markets). So by and large I dont think this should be an issue in long term but for some short financial crisis.
Also MNAL post seperation from its partner, has merged itself with parent company just to protect itself financially. With limited portfolio their sales is even less and are getting beaten up from new as well as existing players. But India is always unique and will require more than usual time for you to settle. Anyway with current condition may continue till new stable Govt. sets in which is atleast 2 qtrs away, we may see some sales and market share correction only after that.

Originally Posted by TheARUN

.... This I think has more to do with the Mercedes Benz bus business that they run partnering with Sutlej

This is for DICV which manufactures Bharat Benz and Mercedes Benz range of trucks. This as a company is seperate and that's now suffering.
Also JV with Sutlej is just for bus body and that too may terminate soon.

[drive_factor]

Received this email from the company. Should clear up the picture

-----------------------------------------------------------------------------

Dear Mr. XXXXX,

The Times of India has printed a title in which they state that – influenced by the bad market situation - Daimler India’s truck business is financially sick. The article also carries our statement that this is not the case and that we are only following a statutory requirement purely by technical terms.

In order to achieve the world-class standards that Daimler is known for and to be able to realise our promises to the Indian customer Daimler has left no stone unturned. The investments made thus far have been planned with a very long-term vision and you will witness our growth in the years to come.

However, purely from an angle of accounting and the principles of statutory commitment to law, DICV has had to report its financial status to the Board for Industrial & Financial Regulation. Owing to high level of investments, a reasonable time period is required to achieve return on investments and profitability. In fact, we are exactly in line with our business plan.

Since 2009, our systematically planned approach enabled us to reach our milestones successfully in time every time. This is clearly a qualitative reflection of each and every one amongst us and our commitment. We have already been witnessing the impact that BharatBenz has been creating even amongst other players of repute. There is a transformation of positivity that BharatBenz has been creating and this augurs well for the Indian customer. We are continuing to invest further to extend our range of products.

The management of DICV assures you that DICV is not only a strong company and part of a world-leading automotive group but will continue to play the game changer with our products and services

We look forward to your continued focus and commitment in making the BharatBenz story a success.

Best regards,

XXXXXXX

[vinjosep]

Originally Posted by Ashley2

.......

Originally Posted by drive_factor

...

Thank you. That's more in line with my perception of the firm in India as well as the increasing number of examples on the road

Another instance of reporting without due diligence by TOI..! The content was quite misleading.

[Autolock123]

The article below was published in Business Standard newspaper dated 29th Dec 2014

Anyone in the trucking business would be familiar with its unwritten code: typically, there is a ratio between the number of trucks sold in a year and the population of a country, which is around one truck sold per 1,000 citizens. One sees this in Germany, where you have 80 million people and a market size of 80,000 trucks (above 6 tonnes) per year. China, with 1.35 billion people, has a truck market of about a million. Now consider this: in India, with a country of 1.25 billion people, the truck market during a good year - 2011 - saw the sale of only 334,000 units. This fiscal, sales in the market are likely to further dip to 200,000 units with the downturn.

http://www.business-standard.com/art...2800630_1.html