Daimler AG targets 940,000 CV sales by 2015

The company promotes common components and new model releases in developed and emerging markets

2013/03/14

Summary
Targets of Daimler commercial vehicle divisions
Daimler Commercial Vehicle Divisions: 2012 Sales and 2013 forecasts
Daimler commercial vehicle divisions raised total revenue by 4.8%, dropped EBIT by 29.6% in 2012
Developed markets: Germany, the U.S. and Japan
Emerging markets: India, Russia, China and others
Daimler commercial vehicles product planning
Reference: Daimler Group's business performance in 2012
Reference: Regional unit sales of each Daimler commercial vehicle division

Summary

Daimler Commercial Vehicle's Unit Sales Volume Daimler AG's commercial vehicle business is comprised of three divisions: Daimler Trucks, Mercedes-Benz Vans and Daimler Buses.

In 2012 Daimler Trucks expanded sales to 461,954 units, up 8.5% from 2011, while Mercedes-Benz Vans decreased sales by 4.5% y/y to 252,418 units and Daimler Buses dropped sales by 19.3% y/y to 32,088 units.

Daimler Trucks increased its unit sales as growth in the NAFTA region and Asia compensated the drop in Western Europe. Unit sales decreased in Western Europe by 5.5% from 61,000 units in 2011 to 58,000 units in 2012. Conversely, they increased in the NAFTA region by 18.4% y/y from 114,000 units to 135,000 units and in Asia by 21.3% y/y from 135,000 units to 164,000 units. In Latin America excluding Mexico, sales fell by 25.4% to 46,000 units from the previous year's brisk sales of 62,000 units.

Mercedes-Benz Vans dropped unit sales in Western Europe by 7.5% y/y to 165,000 units in 2012 and in Asia by 25.6% y/y from 18,000 units to 13,000 units in 2012.

Daimler Buses suffered from lower demands of buses in Latin America, where its sales fell from 25,000 units in 2011 to 18,000 units in 2012.

2015 sales targets are 500,000 units for Daimler Trucks, 400,000 units for Mercedes-Benz Vans and 40,000 units for Daimler Buses.

Daimler plans to promote use of common components in vehicles, reduce production costs through creating a global network among its production facilities, upgrade and increase models, and enhance sales in the existing markets as well as entering new markets.

Related reports:
Mercedes-Benz plans to sell 1.6 million units in 2015 (Feb 2013)
North American commercial vehicle market trends (Jan 2013)

Targets of Daimler commercial vehicle divisions

Daimler Trucks	* "Daimler Trucks #1" midterm plan targets sales of 500,000 units by 2015 and 700,000 by 2020. * Daimler Trucks aims to reduce costs by increasing shared components, including powertrains, under its module strategy and to contribute 1.6 billion Euros in earnings by 2014. * Expanding the product portfolio, improving the product competitiveness, and increasing and strengthening local brand models for emerging markets. * Continual development of green technologies to meet the environmental regulations. * To achieve 8% on return on sales.
Mercedes-Benz Vans	* "Mercedes-Benz Vans goes global" growth strategy aims to increase sales and local production outside the EU including Latin America and Russia. * To achieve 400,000 unit sales in 2015. * To achieve 9% on return on sales. * Mercedes-Benz Vans aims to increase 100 million Euros in earnings through cost reduction.
Daimler Buses	* Daimler Buses aims to sell 40,000 units/year by 2015. * To launch "GLOBE 2013" cost reduction/growth campaign in order to achieve 6% return on sales. * To invest in setting up a network among its production facilities in Turkey, Germany and Czech Republic and thus to exploit both existing and emerging markets. * To launch Euro 6-compatible long-distance/city buses.

Daimler Commercial Vehicle Divisions: 2012 Sales and 2013 forecasts

In 2012 Daimler Trucks sold 461,954 units, up 8.5% y/y. Unit sales declined in Western Europe as well as in Brazil, where Euro 5 replaced Euro 3 in 2012 and the rush demand for Euro 3 compatible trucks at the end of 2011 negatively affected sales in 2012. In the first half of 2012, sales expanded in the NAFTA region due to increased demand for replacement trucks. In Japan sales also increased in 2012 as a result of higher demand from the extensive reconstruction work due to the Great East Japan Earthquake in 2011.

Mercedes-Benz Vans decreased sales by 4.5% y/y to 252,418, largely affected by low sales in its major market, Western Europe. Daimler Buses dropped sales by 19.3% due to weak sales in Latin America.

According to Daimler, growth in the global truck market in 2013 is expected to be driven mainly by the demand in China, recovering from the drop in 2012. In North America, the OEM anticipates a decline of 5 to 10% because of the fiscal problems in the United States. As for the European truck market, it also expect demand to fall by up to 5% due to the ongoing weak economic environment. The Japanese market is assumed to be at about the prior-year level, due to the demand from reconstruction work. As for the Brazilian market, it expects 10% growth, judging from better economic prospects.

Daimler Trucks, therefore anticipates moderate or even negative development in unit sales in early 2013 due to the difficult economic situation in its key markets, however, the introduction of Euro 6 scheduled for 2014 is expected to stimulate the purchase of the compatible trucks later in the year.

Mercedes-Benz Vans plans to increase its unit sales by new model launches, market development outside Europe and expanded local production including collaboration with GAZ Group in Russia.

Daimler Buses assumes increased unit sales through the continued "GLOBE 2013" business plan, aggressive sales through new model launches and demand growth in Brazil in advance of the soccer World Cup in 2014 and the Olympic Games in 2016.

Daimler's commercial vehicle business: sales volume by divisions

(units)

	2008	2009	2010	2011	2012	Changes in 2011-2012 (%)
Trucks	472,074	259,358	355,263	425,756	461,954	8.5%
Vans	287,198	165,576	224,224	264,193	252,418	(4.5%)
Buses	40,591	32,482	39,118	39,741	32,088	(19.3%)
Total	799,863	457,416	618,605	729,690	746,460	2.3%

Source：2013/2/7 Daimler Press Release, Daimler Annual Report 2012-2008

Daimler commercial vehicle divisions raised total revenue by 4.8%, dropped EBIT by 29.6% in 2012

The total revenue of Daimler's commercial vehicle business for 2012 increased by 4.8% y/y to 44,388 million Euros. EBIT dropped largely, 29.6%, from 2,873 million Euros in 2011 to 2,023 million Euros in 2012. The OEM explained that the reasons behind the EBIT drop was due to the following: Mercedes-Benz Vans' unit sales decline affected by the stagnant Western European market, Daimler Buses' deficit of 232 million Euros and the income drop negatively affected by the currency exchange rate.

Daimler's commercial vehicle's business results

(in millions of Euro)

		2009	2010	2011	2012	Changes in 2011-2012 (%)
Revenues	Daimler Trucks	18,360	24,024	28,751	31,389	9.2%
	Mercedes-Benz Vans	6,215	7,812	9,179	9,070	(1.2%)
	Daimler Buses	4,238	4,558	4,418	3,929	(11.1%)
	Total	28,813	36,394	42,348	44,388	4.8%
EBIT	Daimler Trucks	(1,001)	1,323	1,876	1,714	(8.6%)
	Mercedes-Benz Vans	26	451	835	541	(35.2%)
	Daimler Buses	183	215	162	(232)	-
	Total	(792)	1,989	2,873	2,023	(29.6%)
Return on Sales	Daimler Trucks	(5.5%)	5.5%	6.5%	5.5%	(1.1pp)
	Mercedes-Benz Vans	0.4%	5.8%	9.1%	6.0%	(3.1pp)
	Daimler Buses	4.3%	4.7%	3.7%	(5.9%)	(9.6pp)
	Total	(2.7%)	5.5%	6.8%	4.6%	(2.2pp)
Capital Investment	Daimler Trucks	597	1,003	1,201	989	(17.7%)
	Mercedes-Benz Vans	113	91	109	223	104.6%
	Daimler Buses	78	95	103	82	(20.4%)
	Total	788	1,189	1,413	1,294	(8.4%)
R&D Costs	Daimler Trucks	1,116	1,282	1,321	1,197	(9.4%)
	Mercedes-Benz Vans	193	267	358	371	3.6%
	Daimler Buses	212	223	225	222	(1.3%)
	Total	1,521	1,772	1,904	1,790	(6.0%)
Number of Employees	Daimler Trucks	70,699	71,706	77,295	80,519	4.2%
	Mercedes-Benz Vans	15,226	14,557	14,889	14,916	0.2%
	Daimler Buses	17,188	17,134	17,495	16,901	(3.4%)
	Total	103,113	103,397	109,679	112,336	2.4%

Source: Daimler Annual Report 2012-2009

Developed markets: Germany, the U.S. and Japan

Daimler is launching models compatible to European emission standards and other environmental regulations, including the Canter Eco Hybrid released in May 2012, in response to the demand for environmentally friendly vehicles. The OEM manufactures powertrains at Detroit Diesel Corp. in the U.S. and plans to establish the global production network in order to reduce cost and improve production efficiency.

Germany

Launching Setra Comfort Class 500	In May 2012, Daimler Buses introduced a new Setra coach, the Comfort Class 500. In the fall of 2012, the two-axle S515 HD, two/three-axle S516 HD and three-axle S517 HD models were launched. Compatible to the Euro 6, which is to be effective in 2014, the model combines lightweight and stiffness. Mercedes-Benz 10.7-liter OM470 engine (428 hp/2,100 Nm) has improved its fuel efficiency and performance.
Launching green vehicles	In September 2012, Daimler exhibited a total of 70 vehicles at the 64th IAA Commercial Vehicles show in Hanover. Mercedes-Benz all-electric 7-seater minibus, the Vito E-Cell crewbus and the Sprinter E-CELL commercial van made their debut. The Fuso Canter Eco Hybrid compact truck was presented for the first time in Europe.
Personnel downsizing in commercial vehicle division	According to a report, Daimler planned to cut 800 non-production jobs of its commercial vehicle division in Germany in February 2013.

The United States

Production operation upgrades	In December 2012, Daimler unveiled a USD 120 million investment in the Redford plant of Detroit Diesel Corp., its engine-manufacturing subsidiary in Michigan. It plans to produce the Detroit DT12 automated manual transmission and the new Detroit DD15 asymmetric turbocharged engine. The plant currently supplies powertrains for the Freightliner and Western Star brands' commercial vehicles. This new investment will enable Daimler to manufacture commercial vehicle powertrains in-house in North America, which should reduce costs.
Reorganization of bus business systems	In March 2012, Daimler announced its plan to reorganize the bus business systems. It will discontinue the Orion North American bus brand to focus on the Setra brand. Upon completion of production for existing orders for the Orion buses, the OEM will shut down the Mississauga plant in Ontario, Canada by the end of 2013. The plant in Oriskany, NY will continue operations limited to replacement parts production and services to existing Orion customers. The OEM will continue to export German-made Setra brand models to the North American market.
Layoff planned at Freightliner brand facilities	In February 2013, Daimler decided to lay off 1,300 employees in the Freightliner brand business, one of its commercial vehicle segments in North America. In January 2012, the OEM had announced that 1,100 new jobs would be created at its plant in Cleveland by September 2012 in order to address the increasing replacement demand for heavy-duty trucks. In the summer of 2012, however, it revised the plan and halved the employment size as the actual demand fell below the projection.

Japan

Worldwide launch of Canter Eco Hybrid	In May 2012, Mitsubishi Fuso Truck & Bus Corp. (MFTBC or FUSO) of the Daimler Group announced the Canter Eco Hybrid, an HV version of its "Canter" light-duty truck, and it was released in the Japanese market. As for Europe, KD production of the new Canter Eco Hybrid started at its Tramagal plant in Portugal in September 2012. Daimler will launch the hybrid models in Europe, Asia and other markets including Australia, where the model will be marketed in February 2013.
Partnership with Nissan	In November 2012 Nissan Motor Co., Ltd. and MFTBC announced conclusion of a formal contract for reciprocal OEM supply of light-duty trucks for the Japanese market. Starting in January 2013, Nissan will supply the Atlas F24 as the Canter Guts to MFTBC, while MFTBC will supply the Canter as the NT450 Atlas to Nissan. 500 units of the Canter Guts and 800 units of the NT450 Atlas is planned to be supplied annually.

Worldwide launch of Canter Eco Hybrid

In May 2012, Mitsubishi Fuso Truck & Bus Corp. (MFTBC or FUSO) of the Daimler Group announced the Canter Eco Hybrid, an HV version of its "Canter" light-duty truck, and it was released in the Japanese market. As for Europe, KD production of the new Canter Eco Hybrid started at its Tramagal plant in Portugal in September 2012. Daimler will launch the hybrid models in Europe, Asia and other markets including Australia, where the model will be marketed in February 2013.

Partnership with Nissan

In November 2012 Nissan Motor Co., Ltd. and MFTBC announced conclusion of a formal contract for reciprocal OEM supply of light-duty trucks for the Japanese market. Starting in January 2013, Nissan will supply the Atlas F24 as the Canter Guts to MFTBC, while MFTBC will supply the Canter as the NT450 Atlas to Nissan. 500 units of the Canter Guts and 800 units of the NT450 Atlas is planned to be supplied annually.

Emerging markets: India, Russia, China and others

For emerging markets, Daimler emphasizes product portfolio that reflect respective situations of local production, parts procurement and demand. In India, it has launched the BharatBenz brand, whose range will be a total of 17 models in weight classes from 7 to 49 metric tons by 2014. In China the OEM will start joint production of engines for the Auman brand with its Chinese partner Beiqi Foton Motor Co., Ltd. in 2016. In Russia it plans to establish local production operations through licensing its cab to Kamaz OAO.

India

New Bharat Benz brand	Model launch plan and market share target	In February 2012, Daimler announced its new truck brand BharatBenz. By 2014, it will launch a total of 17 models of 7 to 49t GVW to achieve 20% market share by 2020.
	Production operations: Use of Mercedes-Benz and FUSO platforms	Daimler's subsidiary in India, Daimler India Commercial Vehicle (DICV), produces trucks and powertrains at the Oragadam plant. In September 2012, it commenced production of 25t/31t GVW cargo trucks and 25t GVW dump trucks. These are based on the Mercedes-Benz Axor heavy-duty truck's platform. In October 2012, Daimler also started manufacturing 9t/12t GVW cargo trucks and 12t GVW dump trucks, based on the platforms of the FUSO light-duty Canter and medium-duty Fighter. In developing and manufacturing these trucks, Daimler obtained assistance from MFTBC in vehicle design, local production of engines and transmissions, production technologies and other areas.
	New facilities	In April 2012, Daimler opened a new plant in Oragadam, the suburb of Chennai. Vehicle production at its Pune plant as well as R&D has been transferred to the new plant. The total investment is 44 billion rupees (over 700 million Euros approximately) for both manufacturing and R&D divisions. With over 40% of its local suppliers located within 40 km of the plant, Daimler aims to achieve the local content ratio of over 85%. Products of the new plant will not only cater to the Indian market but will also be exported from 2013. Possible destinations are in the Asian and African regions.
City bus introduction		In March 2012, Daimler launched the city bus jointly manufactured with MCV(Manufacturing Commercial Vehicles) of Egypt. According to Daimler, the Indian bus market is the second largest after China, with 46,000-unit size in 2012, and the sales are expected to total 80,000 units in India by 2020, to account for 20% of the worldwide demand for buses.

Russia

Partnership with KAMAZ	Licensed cab production	In June 2012, Daimler announced conclusion of a contract that it would supply the heavy-duty Axor truck cabs to Russian KAMAZ and allow the partner licensed production in a phased manner. Daimler and KAMAZ established the partnership in 2008 and commenced two joint ventures of Mercedes-Benz Trucks Vostok (MBTV) and Fuso Kamaz Trucks Rus. (FKTR) in Russia. MBTV's products include the Mercedes-Benz Actros and Axor, while FKTR produces the Fuso Canter light truck.
	Licensed cab production	In 2012, Daimler provided several cabs to KAMAZ for prototype vehicles. Individual components for assembling KAMAZ brand trucks is planned to be delivered to the Naberezhnye Chelny plant in the Russian Republic of Tatarstan later. Daimler also aims to gradually raise the local content ratio.
	Launching/sales plans	KAMAZ, as a long-term plan, aims to introduce the next-generation truck model in 2013 and to sell over 20,000 trucks equipped with cabs supplied from Daimler annually.
	Supply of engines and axles	In November 2012, Daimler announced that it would supply KAMAZ with 7,000 engines and 15,000 axles per year. It would supply KAMAZ Naberezhnye Chelny plant with front and rear axles for trucks and buses from its plant in Gaggenau, Germany as well as the OM 457 truck diesel engines and the M 906 bus natural gas engines from its plant in Mannheim, Germany. In the future, the two companies plan to jointly manufacture axles in Russia.
Partnership with GAZ	Investment in Sprinter T1N production	In June 2012, Daimler announced its plan to start manufacturing the Sprinter T1N from the first half of 2013 at GAZ plant in Nizhny Novgorod, Western Russia. Daimler will invest more than 100 million Euros, while GAZ will invest over 90 million Euros in the project. The YaMZ-530 Euro-4 engines produced at GAZ Group's new production site in Yaroslavl will be mounted on the Sprinter T1N.

China

JV with Beiji Foton Motor Co., Ltd.	Setting up JV	On February 18, 2012, a JV between Daimler and Beiqi Foton Motor Co., Ltd., Beijing Foton Daimler Automotive Co. Ltd. (BFDA), was established in Beijing. It is a fifty-fifty commercial vehicle JV to manufacture Foton's Auman brand medium- and heavy-duty trucks.
	Entry into new markets	Through the new JV, Daimler aims to expand the product portfolio and market share in the Chinese truck market. With the BFDA positioned as a core organization, Daimler plans to set up more JVs in stages in Russia, South Asia, Latin America and other regions.
	Local engine production	According to an announcement in July 2012, the JV will commence construction of the production facility for Mercedes-Benz OM 457 engines in the first half of 2013 to start operations in 2014. It will be capable of producing up to 45,000 engines/year. The initial local content ratio is expected to be 40%, which will be gradually raised to 65% over medium to long term. Prior to commencement of the engine plant, Mercedes-Benz plant in Mannheim, Germany will supply the engines. The OM 457 provides up to 450hp and meets the Euro5 and 6 standards.
	Local engine production	Daimler plans to set up another engine plant in 2014, jointly with the BFDA. It is scheduled to start supplying engines for the Auman brand trucks in 2016.

Note: Fujian Benz Automotive Corp. produces the Vito, Viano and Sprinter models as Daimler's only van supplier in the Asia Pacific region. Construction started in 2007 and operations started in April 2010.

Latin America

Brazil: Investment in facilities	Mercedes-Benz do Brazil invested 650 million Euros in 2010 through 2013 in two of its truck plants at Sao Bernado do Campo and Juiz de For and in R&D operations. The annual output capacity has been raised by 15% to 75,000 trucks. As part of Daimler's commercial vehicle facilities for the global market, the Juiz de Fora plant started manufacturing the Mercedes-Benz Actors and Accelo in 2012.
Argentina: Sprinter production startup and expanded production	In March 2012, Daimler announced commencement of the Sprinter production in Buenos Aires. The Sprinter is Mercedes-Benz Vans' flagship model used as a transport bus in Latin America. The announcement included its schedule for a launch on the Latin American market in May 2012.
	In October 2012, Daimler announced that it would invest approximately USD 170 million in the Juan Manuel Fangio plant in Bunos Aires over the next few years. It will create 850 new jobs and produce a new midsized van, the Atron 1624 and Atron 1634 trucks, and the LO915, OF1722, and OH1518 bus chassis.
Colombia: CKD production startup	In February 2012, Daimler announced commencement of CKD production at the Bogota plant, which assembles new bus chassis based on the Mercedes-Benz 1016 and the Thomas Built Bus EF 1723. As CKD kits, the 1016 chassis are delivered from the plant in Worth, Germany and the 1723 chassis from High Point, North Carolina, the U.S. Daimler plans to raise the original local content ratio of 10% to at least 18% in the future.

Daimler commercial vehicles product planning

Daimler Trucks

Under the Daimler Trucks #1 program, Daimler Trucks division will pursue production cost reduction through implementing module strategies for vehicle components and networking its facilities worldwide, and will launch new models. It will also introduce Euro 6 compatible models and further upgrade its environmental technologies in order to respond to emission regulations of different countries including the Greenhouse Gas Standard in North America.

Actros	In April 2011, Daimler announced the new Actros. Based on a new heavy-duty truck platform, it is prepared for a long-distance transportation with the living area separated from the driver seat. Compared to the previous models, the Euro 6 compatible model is 4.5% and the Euro 5 model is 7.6% more fuel-efficient.
Antos	In June 2012, Daimler presented the new Antos. Based on a new heavy-duty truck platform and equipped with the Euro 6 engines of 175 kW (238 hp) to 375 kW (510 hp), it is specially designed for short-radius distribution with increased visibility and load capacity. The Antos is provided in a wide variety with two and three axles and wheelbase lengths ranging from 2,650 mm up to 6,700 mm to satisfy customers' needs.
Arocs	In November 2012, Daimler announced the Arocs, a new construction vehicle based on a new heavy-duty truck platform. The model will be provided in various forms, including dump trucks, concrete mixers and tractor units, and is available as two, three or four-axle vehicles to meet different demands. 16 types of engines from 175 kW (238 hp) to 460 kW (625 hp) are all compatible to Euro 6. The model is scheduled to debut at the U.K. Commercial Vehicle Show in April 2013.
Atego	In February 2013, Daimler announced the new Atego, based on a new medium-duty truck platform. Available in the four-cylinder OM 934 engine series with a performance range from 115 kW (156 hp) to 170 kW (231 hp) and the six-cylinder OM 936 engines with a performance range from 175 kW (238 hp) to 220 kW (299 hp). All of them meet the Euro 6 requirements. The new Atego is scheduled to debut at the U.K. Commercial Vehicle Show in April 2013.
Fuso Canter Eco Hybrid	The second generation of the hybrid light-duty truck, introduced in Japan in May 2012 and in Europe in September 2012. It incorporates a world's first hybrid system which combines dual-clutch transmission and hybrid motor. Achieved fuel efficiency of 12.8 km/liter (heavy vehicle mode, GVW 3.5 to 5t, load capacity 2-ton class), which is 23% more fuel-efficient than the regular Canter.

Mercedes-Benz Vans

Mercedes-Benz Vans division plans to increase unit sales in 2013 through 2014. Under the "Vans goes global" strategy, it plans to increase sales and local production in emerging markets including Latin America and Russia. It also plans to launch an all-new van in Europe in mid 2013.

Citan	In February 2012, Daimler announced the Citan city van, based on the Renault Kangoo. Available with a turbo gasoline engine of 84 kW/114 ps and three turbo diesel engines ranging from 55 kW/75 hp to 81 kW/110 hp. The Citan BlueEFFICIENCY has achieved fuel consumption of 4.3 liter/100 km. Daimler anticipates sales growth of this model.
Sprinter	In October 2012, Daimler announced the new Sprinter, equipped with an electronically controlled 7-speed automatic 7G-Tronic transmission and a CDI engine. Since March 2012, it has been manufacturing the Sprinter in Argentina and in early 2013 the Sprinter production is scheduled to start at Russian GAZ as well. Daimler thus plans to launch the model outside Europe.

Daimler Buses

Under the "GLOBE 2013" program, Daimler Buses division aims to achieve return on sales of 6%. It will enhance the network of production facilities in Europe, further exploit existing growth potential in its traditional markets and further expand business into new areas. A new model is planned to be released in the fall of 2013.

Citaro	In July 2012 Daimler Buses division announced the new Citaro, available with two types of Euro 6-compliant engines of the OM 936 (220 kW and 260 kW) and OM 470 (265 kW and 290 kW). It is a regular-service bus model manufactured by the Group's EvoBus.
Setra	A travel coach manufactured by the Group's EvoBus. In July 2012, the division introduced the new Setra Comfort Class 500, powered by the OM 470 engine with 315 kW (425 hp) and 2,100 Nm peak torque. The new model will be launched in the fall of 2013.
Tourismo	A coach for a long-distance travel manufactured by Daimler Buses division. A new model is scheduled for a launch in 2013.