Post on 08-Nov-2014
description
transcript
FIBRESResearch
Daimler presents ‘BharatBenz’ for India
The new entrant in the Indian CV marketThe new entrant in the Indian CV marketThe new entrant in the Indian CV marketThe new entrant in the Indian CV market
FIBRES Research (CVBU) December 2011
2
FIBRESResearch
ForewordForewordForewordForeword
� India has been standing tall among the global ruins ever since the world was hit by the financial tsunami in 2008. Post the 2008
crisis, Indian truck market galloped with high rates of growth partly due to low base but largely due to genuine demand for
commercial vehicles (CVs) propelled by robust economic growth.
� Given the abysmal growth rates as recorded by the global CV markets, the world’s largest CV maker (above 6 tonne category),
Daimler AG decided to land on the shores of the Indian market to forge a partnership with India’s Hero Group in 2008.
� However, due to the economic uncertainty arising due to 2008 crisis, Hero Group withdrew from the joint venture in 2009 and
Daimler decided to go solo in the Indian market, though it was not initially willing to part ways! It also realized that that just by
assembling the completely knocked down (CKD) kits of trucks will not help it to get a strong foot hold in the fast emerging world’s
one of the largest CV markets.
� Post the split and this realization, Daimler went into a huddle to have a re-think over its India strategy. Given the attractiveness of
the Indian market, it decided not to quit India and take the split as a blessing in disguise. With this positive attitude, Daimler
devised a fresh strategy and thereby decided to give birth to an altogether new brand specifically for India, something it has never
done before.
� On February 17, 2011, Daimler revealed its new brand and logo, ‘BharatBenz’, to the amazement of everyone. Under
BharatBenz, Daimler strategized to build India business from scratch – a very bold step of which it had no experience to fall back
on or a blueprint to refer to!
� With a determined mind, Daimler went about revealing nuggets of its strategy – India pricing, stripped-down versions of global
truck platforms, end-to-end India manufacturing, high levels of localization, developing ‘Services’ as a strong business etc. which
made many CV makers to sit up and take notice. And coupled with its strong ‘Benz’ brand recall in India, it looked like a serious
competitor emerging on the horizon. This made it imperative to have a deep dive into Daimler’s India Strategy under the garb of
BharatBenz and be prepared to welcome the new entrant with a proactive mind.
In the light of this, we welcome you all to read about the story called ‘BharatBenz’…
The story called ‘BharatBenz’
3
FIBRESResearch
Contents of the report
38SOWT analysis of BharatBenz11
39Conclusion – What Tata Motors should do?12
28Pricing Strategy of BharatBenz trucks7
29Network planning Strategy8
30-35BharatBenz’ After sales model & IT strategy9
36-37Implications – Emergence of the ‘new middle’ market10
22-27BharatBenz Product and Aggregates Strategy6
18-21BharatBenz’ Manufacturing and Sourcing Strategy5
14-17BharatBenz’ Leadership Team and the Advisory Council4
12-13Leading the paradigm shift – Inception, Vision, Values & the Brand3
10-11Strategic intent of Daimler India CV – birth of a new brand2
4-9The Paradigm Shift1
Page nos.TopicsSr.No.
4
FIBRESResearch
The Paradigm shift!!
India is changing – As India grows to be a an
economic super power, it will witness a paradigm
shift in the consumer behavior which will in turn
lead to a shift in product offerings…
…Daimler intends to ride on this paradigm shift
5
FIBRESResearch
Over the years, our experiences have evolved for the better,
enabled by innovation all through
Music on the move
Converse on the move
Click in a giffy
Gateway to a virtual world
Communicate on the move
+
+
+
=
The ALL in One
Consumer is the first beneficiary,
Organizations who innovate for this
consumer create immortal brands
Innovation has driven change and will now lead to the paradigm shift…
6
FIBRESResearch
Customers & Users drive this shift ; Organizations which are
able to foresee this enjoy long term ‘differentiation’
Quality
Accessibility
Serviceability
Technology
Sustainability
Product Experience
Superior Products, Innovation are a necessary condition, but will not be a
sufficient condition for “Brand Differentiation”. Consumer experience will
play a bigger role as product differentiation will cease
Reliable
Competent
Convenience
One Stop solution
Life cycle
involvement
7
FIBRESResearch
The Auto Industry too has kept pace; and so focus should
now shift to Customer & Consumer Experience…
Convenience of
Reach
Any time
Service
Skilled
Manpower
Products have changed Retail infrastructure has changed
Need to focus on ‘Consumer Experience’
– Product Brand needs to complement the Retail Experience
8
FIBRESResearch
Dealerships’ paradigm is set to change as it faces the OEMs
and the customers – and both are changing at a fast pace
Change is the only CONSTANT
� Limited choice
� Premium Driven
� Limited Access to Information
� Limited financial leverage
� Inadequate infrastructure
� Less Competition
� Little investment in innovation /
change
� Less Customer Focus
� Production Driven
� Little regulation
� More demanding
� Value driven
� One World – No time lag between
developed and developing economies
� Boom in business as financing paradigm
changed
� High pace of infrastructure change –
Roads, Ports, etc.
� Global leaders drive competition
� Latest technologies – harness global
strengths
� Concepts like CRM and 24 X 7
� Demand Driven
� Highly regulation driven – Emission,
safety etc.
Cu
sto
mers
OE
Ms
In India, we have examples of paradigm shifts in many spheres
IT industry – Telephony – Health Tourism – BOT roads – Micro finance – Small Cars
All of the above show that ‘leap-frog’ against ‘natural progression’ itself is a paradigm shift
9
FIBRESResearch
Success of same products varies across locations. Today it
has become imperative for the Network to deliver on..
MANPOWER
Quality, Skilled and
Employability
MANAGEMENT
Professional and
Transparent
BEST PRACTICES
Ethics &
Compliance
CUSTOMER
Satisfaction &
Retention
LOYALTY
Loyalty towards
experience
Internalize learning and leverage it across businesses
Build brand equity to attract and retain talent
Participate in skill development of the country
Mirror customer expectations to the OEMs
INFRASTRUCTURE
Reach & Coverage
World Class
10
FIBRESResearch
Inspired by this impending change, Daimler plans to challenge
established conventions and induce shift
PRODUCT OFFERINGS
NETWORK APPROACH
CUSTOMER ENGAGEMENT
SYSTEMS & PROCESSES
World tested, reliable products made affordable
to Indian Mass Market
Look at long term partnerships. Lead the desire
of partners to grow.
Participate with the customer in his entire
business lifecycle
Processes to enhance workflow reliability and
“Zero” defect operations
The Strategic Intent of Daimler AG for India – 4-pronged approach
Introducing BharatBenz for India
– thereby establishing 5th brand in its global truck portfolio
HOW??
11
FIBRESResearch
India gets special importance
– Birth of a new brand especially for India
Till recently, Daimler Trucks were manufactured and sold under its 4 major brands globally –
Mercedes-Benz, Freightliner, Western Star and Fuso. Recognizing India’s potential, it created a
new brand ‘BharatBenz’ especially for the Indian market in 2011
++++Daimler’s
Global Truck
Brand portfolio
Given the uniqueness
of the Indian market,
Daimler recently
introduced a new brand
‘BharatBenz’ especially
for the Indian market
12
FIBRESResearch
Leading the
Paradigm shift!!
How Daimler plans to execute
its strategic intent??
Here we go…
13
FIBRESResearch
Introducing Daimler India Commercial Vehicles (DICV)
– Inception, Vision, Values and the Brand
Daimler AG incorporated Daimler India Commercial Vehicles (DICV)
in 2008 in order to build its trucks locally in partnerships with Indian
suppliers
Vision
Delight customers
and transform the
Indian CV industry
Daimler initially entered into a JV with Hero Group in 2008 with 60% stake by Daimler and 40% by Hero
Group. However, due to recession in late 2008, Hero Group withdrew from the JV, leaving Daimler to raise its
stake to 100%, thereby converting it into a wholly-owned subsidiary.
Backed by Daimler’s legendary technological standards and an in-depth understanding of the Indian truck
market, Daimler India Commercial Vehicles (DICV) intends to build a robust, reliable and performance-oriented
trucking solutions for the Indian market. And these trucking solutions will be launched under a newly created
brand ‘BharatBenz’ – signifying Benz technology meshed with Bharat’s market insights.
Values
Passion, Respect,
Integrity, Discipline
and Fairness
14
FIBRESResearch
The BharatBenz Leadership Team
Functions related to ‘Product Engineering’
and ‘Procurement & Logistics’ are headed by
the Germans, whereas the other key local
functions like ‘Sales & Marketing’, ‘Finance’,
‘HR’ and ‘Manufacturing’ related areas are
headed by the Indians – thereby trying to
mesh German engineering expertise with
Indian market knowledge and experienceMarc Llistosella
Managing Director & CEO
Erich NesselhaufVice President
Procurement,
PSSM & Logistics
Aydogan CakmazVice President
Product
Engineering
Vijay TuliVice President
Production
Engineering
VRV SriprasadVice President
Marketing, Sales
& After Sales
Sanjiv KhuranaChief Financial
Officer
T. NarayananVice President
Human Resources,
Legal & Compliance
Headed by Germans Headed by Indians
Daimler has about 400 employees on its
rolls which includes both the nationalities –
Germans and Indians. Additionally, it
employs about 500 engineers in its R&D
centre which it plans to double by 2013.
By the time the plant is ready, the
company’s total headcount is likely to touch
about 3,000.
Daimler India Commercial Vehicles (DICV) leadership team comes with
a diverse mix of global expertise along with local market insights
15
FIBRESResearch
Who are these guys??
– Background of Daimler’s India Leadership Team…
Sanjiv Khurana (Chief Finance Officer)
� Earlier worked with ‘Freightliner’, Daimler Trucks as GM – Finance & Controlling ( 1½ years), Finance
head for the Aftermarket and Specialty vehicles business of Freightliner, including Thomas Bus and
Freightliner Custom Chassis. Responsible for M&A projects and transactions.
� Besides this, he has worked at American LaFrance, Delphi etc. with about total 20+ years of workex.
� Has an MBA, Finance, General Management (The University of Chicago - Booth School of Business),
MS (Engineering) from University of Michigan
VRV Sriprasad (VP – Marketing, Sales and After Sales)
� Earlier worked with Eicher – in the Marketing Division for about 23 years before joining Daimler in 2008
� Has a BE Mechanical degree from Coimbatore Institute of Technology
Vijay Tuli (VP – Production Engineering)
� Worked earlier at M&M Ltd. – as Senior GM (Operations)
Based on the available information, we have drawn up the background of
the key senior managers of the Daimler’s India Leadership team so as to
know their key strengths and expertise…
16
FIBRESResearch
Background of Daimler’s India Leadership Team (contd.)…
� Expertise in all functions of supply chain like Strategic Sourcing, Contract Management, Supplier
Assessment and Development, Supply Chain Design and Quality Assurance, Project Management
� Member of Executive Committee at Daimler India Commercial Vehicles Pvt Ltd
� Member of various cross functional executive committees at Daimler India giving exposure to
manufacturing, production planning and site readiness, labor and work force management and policy
making, Product Planning and execution of product related strategies
� Member of Daimler Trucks Global Purchasing Management Team with responsibility to define and
implement global procurement processes and policies, performance management and tracking, emerging
market sourcing guidelines and ensuring Code of Conduct at all purchasing offices of Daimler Trucks &
Buses
� Functional specialties
- Global Sourcing
- Procurement & Supplier Development
- Supply Chain Design & Management
- Project Management
- Supplier Relationship Management
- Green Field Projects
- Partnership and Alliance Management
- Organization Development & Human Resource Planning
� Graduated with Business Economist degree
Erich Nesselhauf (VP – Supply Chain (Procurement, Supplier Management & Logistics)
17
FIBRESResearch
And to support the Leadership team, Daimler has formed a
5-member Advisory Council in India…
Mr. Baba Kalyani
Chairman & MD
Bharat Forge
Mr. Lakshmi Narayanan
Vice Chairman,
Cognizant Technology
Ms. Renu Karnad
Managing Director
HDFC Ltd.
Mr. Arun Ramanathan
Former Finance
Secretary
Mr. P.S. Raman
Advocate-General,
Tamil Nadu
Daimler’s Advisory Council for India
Daimler India has put together a 5-member Advisory Council in India, which includes the following
eminent people. The advisory council will be a sounding board for Daimler’s Board Members on issues
like truck financing, questions on suppliers, market reach and so on. By setting up this panel, Daimler
is following the footsteps of other global MNCs such as Microsoft, Siemens, Bosch and Novartis in India.
A far-sighted step…
The panel members represent a diverse expertise in the fields of Financing, Law, IT, Government relationships
and Supplier relationships. This panel consisting of the leading luminaries of India Inc. is expected to familiarize the
Daimler’s Management team with the Indian business climate, its regulatory environment and the relationships.
India will also house Daimler's ‘TOS’ experts for South East Asia.
Truck Operating System or TOS is Daimler equivalent of Toyota's
Kaizen (or improvement) approach. These TOS experts would work
with Indian suppliers in effecting dramatic efficiency improvements.
Establishing ‘TOS’ Team for India and South East Asia
18
FIBRESResearch
Manufacturing and sourcing strategy
Production plan as indicated to the vendors
6,000
28,000
48,000
-
10,000
20,000
30,000
40,000
50,000
2012 2013-14 2015-16
� Location: at Oragadam, near Chennai
� Area: ~400 acres of land area
� Capacity: Maximum manufacturing capacity of 70,000
vehicles p.a.
� Phases: Production at the plant will be defined in a
two-phase concept, with first phase to have ~36,000
trucks in 2012
� Also has a high quality painting and finishing line
� Test track – Consists of test track spread over ~47
acres which was inaugurated in May 2010. (Refer
page 25 for details)
Manufacturing Strategy
Some critical components would be manufactured or assembled in-house and most of the other
components will be sourced from Indian suppliers or global suppliers who have established production
facilities in India. Nearly 12-14% of the manufacturing / assembly operations will be done in-house and the
remaining will be sourced from established vendors.
Supplier base:
The supplier base presently stands at around
200 and it is likely to go up to 430. Two key
suppliers — makers of frame and sheet
metal parts will be housed within the factory.
Localization plans:
85% from start which
includes frames, axles,
engines and all other
major aggregates.
Engines:
The engines for the light and medium duty trucks
will be contract manufactured and the ones for
the heavy duty trucks will be manufactured in-
house at the DICV facility at Chennai.
Sourcing Strategy
19
FIBRESResearch
Bird’s eye-view of Daimler’s manufacturing facility in
Chennai, India…
Artist’s impression
20
FIBRESResearch
3-lane outer elevation track
The cobble stone bump track
Articulation & pothole test track
Daimler planned its third global test track in India with Indian
road conditions in mind – implies its seriousness for India
Presently has two different tracks with one to be added in future:
� The three-lane outer track has a total length of 1.55 kilometers
which is equipped with a noise pad and a jump section and is
specially designed for testing the power train and driving noise
� The two-lane inner track is 1.16 kilometers long and includes a
variety of India-specific poor road features like bump track,
pothole testing and articulation sections. This track offers special
testing opportunities, including a water trough, a dusty road and
poor road surfaces.
� Facilities for testing gradeability and steering will be added in the
near future
Spread across 47 acres, the test track was inaugurated in May 2010.
This test track is prepared as a testing hub and provides Daimler to
thoroughly test its trucks for South Asia. The other major tracks are
located are at Woerth, Germany and Kitsuregawa, Japan
Track for South Asia, but built in India
Marc Llistosella, the MD sees the test track as the successful product of German and Indian
collaboration. “Numerous customer studies and measurements were considered during the
construction of the test track to ensure a realistic simulation of the road conditions in India.
Our trucks will have to undergo a variety of tests to offer our customers high standards of
product performance.”
The intent – specially made with Indian conditions in mind
3 tracks to test all types of road conditions
21
FIBRESResearch
A picture is worth 1000 words!
BharatBenz models being tested on the new test tracks…
� Daimler claims that its trucks have already clocked 1 million kms of
testing in India. Given below is the picture which shows Daimler's
camouflaged trucks (LCVs & HCV) being tested on its new test track.
� Further, the test track would operate as an independent profit
centre, initially for the use of Daimler’s product testing, and later will
be made available even to component vendors and non-core
competitors for testing their products.
BharatBenz
HCV TruckBharatBenz
LCV Trucks
22
FIBRESResearch
BharatBenz Product strategy –
Launch to begin in June ’12; to introduce 16 trucks by 2014
LCVs
MCVs
HCVs
BharatBenz product platforms
GVW: 6-16 T
GVW: > 25 T
Localized
Localized
Daimler plans to introduce 16 trucks in India under the ‘BharatBenz’ brand until 2014
� Deliver global technology at Indian price – Tested for reliability
� LCV & MCV range of products based on FUSO Canter platform
� HCV range of products based on Mercedes-Benz Axor platform
� Products to offer lower Total Cost of Ownership to customer in terms of:
� Higher Service Intervals
� High Reliability
� Low turn around time
� Better Fuel Efficiency
� 25T GVW Haulage truck – June 2012
� 49T GVW Tractor-trailer – June 2012
� 12T GVW Haulage truck – June 2012
� 25T GVW Tipper – Sept 2012
� 31T GVW Haulage truck – Sept 2012
� 31T GVW Tipper
� 40T GVW Tractor-trailer – Dec 2012
� 16T GVW Haulage truck
� 16T GVW Tipper
� 11T GVW Truck
� 9T GVW Truck
� 7T GVW Truck
� 6T GVW Truck
Product launch Map
Daimler plans to introduce its
first set of trucks in June ’12.
After which it will launch a
new model / variant every 2-3
months till 2014. It plans to
come out with its HCV range
first followed by the MCV
range and then the LCV range
23
FIBRESResearch
BharatBenz’s LCV truck range
– based on the Fuso Canter range
For its LCV range (6T to 7.5T), Daimler has the following options from its Fuso Canter
range of trucks, which it is likely to bring to India under the ‘BharatBenz’ brand
The Canter LCV range
Fuso Canter truck range FE 5 - 109 FE 6 - 109 FG 6 - 109 FE 7 - 136
GVW (kgs) 5500 6500 6000 7500
Engine
Make Mitsubishi Mitsubishi Mitsubishi Mitsubishi
Model 4D34-2AT5 4D34-2AT5 4D34-2AT5 4D34-2AT5
Capacity (cc) 3908 3908 3908 3908
Max. Power 110 HP@2900rpm 110 HP@2900rpm 110 HP@2900rpm 136 HP@2900rpm
Max. Torque 275 Nm@1600rpm 275 Nm@1600rpm 275 Nm@1600rpm 370 Nm@1600rpm
Range 4 x 2 range 4 x 2 range 4 x 4 range 4 x 2 range
Maximum Speed (Km/h) 101 101 89 104
Transmission
Make Mitsubishi Mitsubishi Mitsubishi Mitsubishi
Model M025S5 M025S5 M035S5 M035S5
No. of gears 5 speed 5 speed 5 speed 5 speed
Type Synchromesh Synchromesh Synchromesh Synchromesh
Standard tyres
Front 7.00R16 7.00R16 215/75R17.5 215/75R17.5
Rear 7.00R16 7.00R16 215/75R17.5 215/75R17.5
Fuel tank capacity 100 litres 100 litres 100 litres 100 litres
Dimensions
Overall length (mm) 6105 6105 6105
Overall width (mm) 1995 1995 1995
Overall height (mm) 2195 2195 2435
Front overhang (mm) 1145 1145 1130
Rear overhang (mm) 480 1480 1475
Wheelbase (mm) 3350 3350 3460
Turning radius (mm) 6000 6000 6800
Below is the picture of the
camouflaged Fuso Canter LCV
truck being tested on the
Chennai roads
Below are likely specifications of the BharatBenz’s LCV truck
range in India as derived from Mitsubishi Fuso Canter platform
24
FIBRESResearch
BharatBenz’s MCV truck range
– based on the Fuso’s MCV platforms
For its MCV range (10T to 16T), Daimler has the following options from its Fuso MCV
range of trucks, which it is likely to bring to India under the ‘BharatBenz’ brand
The Fuso MCV range
Fuso MCV truck range FK 10 - 240 FK 13 - 240 FM 15 - 270 FM 16 - 270
GVW (kgs) 10400 13500 15100 16000
Engine
Make Mitsubishi Mitsubishi Mitsubishi Mitsubishi
Model 4M50-T5 4M50-T5 4M50-T5 4M50-T5
Capacity (cc) 4899 4899 4899 4899
Max. Power 177 HP@2600rpm 177 HP@2600rpm 177 HP@2600rpm 177 HP@2600rpm
Max. Torque 529 Nm@1400rpm 529 Nm@1400rpm 529 Nm@1400rpm 529 Nm@1400rpm
Transmission
Make Mitsubishi Mitsubishi Mitsubishi Mitsubishi
Model M060S6-0D M070S6-0D M070S6-0D M070S6-0D
No. of gears 6 speed 6 speed 6 speed 6 speed
Type Synchromesh Synchromesh Synchromesh Synchromesh
Rear Axle
Make Mitsubishi Mitsubishi Mitsubishi Mitsubishi
Model D050H D052H D10H D10H
Ratio 4875 5428 4625 4625
Standard tyres
Front 235 / 75 R17.5 265 / 70 R19.5 11R22.5 11R22.5
Rear 235 / 75 R17.5 265 / 70 R19.5 11R22.5 11R22.5
Fuel tank capacity 200 litres 200 litres 200 litres 300 litres
Dimensions
Overall length (mm) 8710 8710 6690 10305
Overall width (mm) 2170 2260 2470 2470
Overall height (mm) 2470 2535 2690 2680
Front overhang (mm) 1135 1135 1245 1245
Rear overhang (mm) 2300 2300 1700 2915
Wheelbase (mm) 5210 5210 3680 6080
Turning radius (mm) 8300 9100 7100 11100
Below are likely specifications of the BharatBenz’s MCV truck range in
India as derived from Mitsubishi Fuso FK/FM MCV platform
25
FIBRESResearch
BharatBenz HCV range
– based on Mercedes-Benz Axor platform
Cab optionsMercedes-Benz AXOR
BharatBenz HCV range 2523 3123 4028 4928
GVW 25 tonnes 31 tonnes 40 tonnes 49 tonnes
EngineMake Mercedes-Benz Mercedes-Benz Mercedes-Benz Mercedes-Benz
Model OM 906 LA OM 906 LA OM 906 LA OM 906 LA
Capacity (cc) 6347 6347 6347 6347
No. of cylinders 6 in-line 6 in-line 6 in-line 6 in-line
Max. Power 231 HP@2300rpm 231 HP@2300rpm 279 HP@2300rpm 279 HP@2300rpm
Max. Torque 810 Nm@1200-1600rpm 810 Nm@1200-1600rpm 1100 Nm@1200-1600rpm 1100 Nm@1200-1600rpm
Transmission
Make Mercedes-Benz Mercedes-Benz Mercedes-Benz Mercedes-Benz
Model G85-6 G85-6 G131-9 G221-9
No. of gears 6 speed 6 speed 9 speed 9 speed
Type Synchromesh Synchromesh Synchromesh Synchromesh
Fuel tank capacity (options) 250-400 litres 250-400 litres 250-400 litres 250-400 litres
Suspension Parabolic leaf spring Parabolic leaf spring Parabolic leaf spring Parabolic leaf spring
Wheelbase (mm) 6000 5175 3600 4000
Air-conditioning Optional Optional Optional Optional
Power windows Optional Optional Optional Optional
BharatBenz’s HCV range will be based on the Mercedes-Benz ‘AXOR’ model.
Based on the understanding available from various sources, we have derived the
following specifications of the BharatBenz’s HCV truck range for India:
Daimler plans a
no-frills product
range to conform
with Indian
prices and as
such plans to
keep AC, Power
windows etc as
optional
Below is the picture of the
Mercedes-Benz AXOR 25T
HCV truck being tested on
its Chennai Test track
26
FIBRESResearch
Daimler’s engine line up for India – Engine options that are
likely to be used in BharatBenz trucks
Model: OM 906 LA
� In-line 6-cylinder engine with an exhaust-gas
turbocharger and charge air inter-cooling
� Displacement: 6374 cc
� 3-valve technology
� Cooling: water-cooled
� Engine management: Electronic engine management
system integrated in the Telligent drive management
system
� Fuel injection system: Unit-Pump System (UPS)
technology with single plunger fuel-injection pumps and
centrally arranged 8-hole or 6-hole injection nozzles
� Injection pressure: up to 1800 bar (Euro 3)
� Performance data for models xx23 –
� Maximum output: 170 kW (231hp) @ 2300 rpm
� Maximum torque: 810 Nm @ 1200 rpm-1600 rpm
� Performance data for models xx28 –
� Maximum output: 205 kW (279hp) @ 2300 rpm
� Maximum torque: 1100 Nm @ 1200 rpm-1600 rpm
� Euro 3 Emission Level
Engines for HCV range
Model: 4M50-T5
(also has T3 & T4 low HP models)
� Electronically controlled water cooled
EGR system
� Common rail direct injection diesel engine
� 16-valve DOHC intercooler-turbocharged
� Displacement: 4899 cc
� Power options:
� 140 HP @ 2600 rpm (T3)
� 160 HP @ 2600 rpm (T4)
� 177 HP @ 2600rpm (T5)
� Torque options:
� 412 Nm @ 1400 rpm (T3)
� 470 Nm @ 1400 rpm (T4)
� 529 Nm@1400rpm (T5)
� Max. speed: 101 kmph
Engines for MCV range
Model: 4D34-2AT5
� Turbocharged with
intercooler
� 4-stroke, water-cooled,
� Direct injection diesel
engine
� Displacement: 3908 cc
� 110 HP@2900rpm
� 275 Nm@1600rpm
� Max. speed: 101 kmph
For LCV range
Daimler is likely to have the following range of engines for its BharatBenz trucks in India:
� 110HP and 170HP engines for LCV and MCV trucks
� 230HP and 280HP engines for the HCV range
While Daimler will manufacture its HCV
engines in-house, unconfirmed sources
mention that it is likely to have a
contract manufacturing deal for its LCV
and MCV engines with Argentum
Motors (led by Mr. BVR Subbu)
27
FIBRESResearch
BharatBenz’s Gearbox options (for HCV range)
– plans to bring in 6 speed and 9 speed gearbox range
G131 – 9 (Ratios)
• 1st gear = 9,478
• 2nd gear = 6,635
• 3rd gear = 4,821
• 4th gear = 3,667
• 5th gear = 2,585
• 6th gear = 1,810
• 7th gear = 1,315
• 8th gear = 1,00
• Crawler gear = 14,573
• Reverse gear = 13,862
Weight (not including oil):
approx. 210 kg
G221 – 9 (Ratios)
• 1st gear = 10,187
• 2nd gear = 7,156
• 3rd gear = 5,129
• 4th gear = 3,833
• 5th gear = 2,657
• 6th gear = 1,867
• 7th gear = 1,338
• 8th gear = 1,00
• Crawler gear = 16,15
• Reverse gear = 14,907
Weight (not including oil):
approx. 290 kg
Models: G131-9 & G221-9
The gearbox G221-9 / G 131-
9 is a direct-drive gearbox with
8 synchromesh forward gears,
one constant-mesh crawler
gear and one reverse gear. It
consists of a 4-speed basic
gearbox with a pneumatic
rear-mounted unit (range). It is
shifted hydro-pneumatically.
9 Speed gearbox range
G85 – 6 (Ratios)
• 1st gear = 6,70
• 2nd gear = 3,81
• 3rd gear = 2,29
• 4th gear = 1,48
• 5th gear = 1,00
• 6th gear = 0,73
• Reverse gear = 6,29
Model: G85 –6
The G 85-6 gearbox is an all-
synchromesh gearbox with 6
forward gears and one
reverse gear. It features a
hydraulic gearshift.
6 Speed gearbox range
Daimler plans to bring in its 6 speed and
9 speed gearboxes for its BharatBenz
HCV range. Following are the gearboxes
which it presently uses in its Mercedes
Axor range and are likely to be the
Indian options as well…
Following
are the
options
28
FIBRESResearch
Pricing Strategy – Global trucks at local prices…
� Higher localization (85%) from the beginning – at local prices
� Local manufacturing of engines – contract & in-house
� In-house manufacturing of frames, axles, sheet metal parts etc.
� Local procurement of most of the components – with a large vendor base (~50%) located within a
50 km distance of the mother plant in Chennai.
� Will also act a shield against currency fluctuations
� Huge tax benefits – Full-fledged manufacturing in India helps in reducing taxes
� 110% customs duty for imported FBU
� 60% customs duty for imports of SKD kits
� 12% excise tax for locally manufactured trucks (including engines and other aggregates)
� No-frill / Stripped down versions of their existing models – Mercedes-Benz Axor and Fuso Canter
products. Basically, Daimler would provide a no-frill products without features such as AC, power
windows etc.
� Additional revenue stream – test track as a ‘Profit Centre’, i.e. it will lend out the test track to others
even to its component vendors and non-core competitors which will help in augmenting its revenues,
although it may not be a major revenue earner
How they are able to make it cheaper? – Global products and local prices!
Daimler plans to price its ‘BharatBenz’ trucks just about 5-10% expensive than the existing truck models in the
market of that of Tata and Ashok Leyland. Some of the pointers to this aggressive pricing strategy could be:
29
FIBRESResearch
Network Planning Strategy – Accelerated network ramp up
planned covering 73 locations of the industry by 2014…
7
63
73
0
10
20
30
40
50
60
70
80
June '12 July '12 to June '13 June '14
Critical period of
network ramp up
during which DICV
plans to launch
most of its models
Distribution network ramp-up plans
(no. of locations)
BharatBenz is in discussion with 200 dealer groups who have expressed interest till date.
However, the company plans to have about 70 dealerships which it feels can cover the entire
Indian market. – says Mr. Marc Llistosela, managing director and CEO of DICV…
Phase wise ramp up plans…
• Network planning based on point of sales and service requirements of customers
– Network approach worked out towards early dealer viability and a promise of
high growth
• Facilitate world class dealership build up with larger areas of operations
• Will involve project monitoring tools – since delays cause the highest cost
• Future proof dealerships with:
� Having Lean Infrastructure with built in expansion scopes
� Generating Long Term Association with clear 2nd generation visibility
Salient features of Daimler’s Network planning strategy
� Phase 1 – By June ’12, 7 locations will be covered
� Phase 2 – Between July ’12 to June ’13, 63
locations will be covered (DICV: 34 and MMC: 29)
� Phase 3 – By June ’14, 73 locations would be
covered
Above these, it will have Regional Offices in major
metros and Area Sales Offices in 10 prominent cities
Dealerships have been granted
in Western and Southern India.
For Central India, they have
started allotting dealerships now.
As far as North is concerned,
some reports say that Daimler has
appointed Mr. BVR Subbu as its
distributor in the Delhi NCR region
30
FIBRESResearch
After sales model
– Focus on life-cycle approach towards customers…
Daimler plans to have service outlets spread over 95 locations
and covering 90% of the total market, right at the time of launch
On site service
Daimler’s After Sales Service Model
Insurance Highway Assist
Long term ServiceAgreements
� Participation in overall lifecycle of product
� Solutions beyond product to enhance peace of mind
� Onsite service solutions – lessons from mining industry
� Empowered front end staff:
� Mechanic access to documentation
� Leverage technology – Manuals / Training / Integrated operations
Salient
featur
es
31
FIBRESResearch
Daimler Financial Services India Private Ltd.
� Officially launched as a Non-Banking Finance Company (NBFC) in July 2011 – captive finance
company as a 100% subsidiary of Daimler Financial Services AG
� Headquartered in Chennai and operating under the brand ‘Mercedes-Benz Financial’ for cars
and ‘BharatBenz Financial’ for trucks
� Initial investment of US$ 50 million (~ Rs.250 cr.)
� Objective – to offer financing, leasing and insurance products to dealers and customers of
Mercedes-Benz cars (with immediate effect) and for BharatBenz Trucks (from 2012 onwards)
� Hopes to break-even in 4-5 years and aims to reach a loan book of US$ 500 million
(~Rs.2,500 cr.) in India by 2016
� Despite the likelihood of truck financing volumes being higher than car loans, the two
businesses will comprise equal halves of Daimler Financial’s India portfolio in the coming years
� Human Capital – Led by Mr. Siddhartha Nair, MD, the team consists of about 50 experienced
industry professionals and more to join soon
Quick Quick Quick Quick
factsfactsfactsfacts
� Daimler Financial Services operates in 40 countries worldwide.
� With contract volume of Euro 64 billion for 2.5 million vehicles at the end of 2010, it is one of the world's
largest automotive financial services providers for passenger cars and the world's largest provider of
financing for trucks, buses and vans.
� Also provides automotive insurance solutions with a contract portfolio of more than 1.8 mn contracts.
� About 40% of Mercedes-Benz cars and about 25% of CVs of the Daimler Group is financed or leased by
Daimler Financial Services AG – The Indian unit intends to replicate this performance in India
Global Track Record
32
FIBRESResearch
Planned business model of Daimler’s Financial Services
business in India
� Dealership based model – Has put in place an electronic point-of-sales system to
deliver speedy loan approval decisions and contract processing across all Mercedes-
Benz dealerships.
� Finance contract sold under the product name ‘STAR Finance’ and has various
structural options like Step-up finance, Step-down finance and Bullet finance
� STAR Finance is also offered with a ‘Balloon’ option – where EMIs are lower with a large
final payment that transfers ownership of the vehicle to the customer
� Margins – Hopes to maintain a net interest margin (NIM) of 3%
� Dealership based model – Has put in place an electronic point-of-sales system to
deliver speedy loan approval decisions and contract processing across all Mercedes-
Benz dealerships.
� Finance contract sold under the product name ‘STAR Finance’ and has various
structural options like Step-up finance, Step-down finance and Bullet finance
� STAR Finance is also offered with a ‘Balloon’ option – where EMIs are lower with a large
final payment that transfers ownership of the vehicle to the customer
� Margins – Hopes to maintain a net interest margin (NIM) of 3%
Financing
Business
� Globally it offers fleet management services – but sources say that is unlikely to launch
the same in India in near future. However, this remains an option in future
� Globally it offers fleet management services – but sources say that is unlikely to launch
the same in India in near future. However, this remains an option in future
Fleet Mgmt
Business
� Got approval in July 2011 from the Insurance Regulatory and Development Authority of
India (IRDA) to offer insurance
� The company will be a corporate agent for Pune-based Bajaj Allianz with which it has
an exclusive tie up for insurance products
� Will be sold under the name of ’Mercedes Benz insurance’
� Got approval in July 2011 from the Insurance Regulatory and Development Authority of
India (IRDA) to offer insurance
� The company will be a corporate agent for Pune-based Bajaj Allianz with which it has
an exclusive tie up for insurance products
� Will be sold under the name of ’Mercedes Benz insurance’
Insurance
Business
� Leasing contract sold under the product name ‘STAR Lease’
� Leasing available based on choice of the vehicle, repayment period and anticipated
contract kilometer limit
� Helps the customer in knowing the vehicle’s future value upfront
� Lease product is bundled with insurance
� Leasing contract sold under the product name ‘STAR Lease’
� Leasing available based on choice of the vehicle, repayment period and anticipated
contract kilometer limit
� Helps the customer in knowing the vehicle’s future value upfront
� Lease product is bundled with insurance
Leasing
Business
� As per some reports, Daimler is likely to enter the
branded credit cards business in 2013
� As per some reports, Daimler is likely to enter the
branded credit cards business in 2013
Credit Card
Business
Daimler
Financial
Services
India
Private
Ltd.
33
FIBRESResearch
TruckStore – Daimler’s brand for its Used Trucks business is
being planned to be introduced in India soon…
TruckStore was one of the first used truck dealers to introduce a clearly defined 3-
level-categorisation of vehicles. According to international standards, the trucks
are categorized into Gold, Silver and Bronze as follows:
� ‘TruckStore’ – is a brand part of the Daimler Trucks division which began its operations in 2001
� Europe’s largest dealer for Used Commercial Vehicles with 31 centers in 15 European countries
� Trades in Used Trucks, Used Vans, Used Tractor units, Trailers, Semitrailers etc. of all types, with all bodies, of any age and of all
brands like – Volvo, Scania, Iveco, MAN, Renault, Mercedes-Benz, Mitsubishi etc.
� Consists of about 4,000 vehicles in stock on an average all over Europe. All the vehicles are classified as Gold, Silver and Bronze
– based on age, condition, mileage and service component of the vehicle (refer boxes below for more details)
� Comes with range of services like financing, leasing, rental, service contracts, buy-back and the TruckStore warranty
� Warranty – It covers trucks of all brands and models of the categories Gold and Silver up to an age of 6 years. With duration of
12 months, the warranty covers the entire powertrain with respect to workshop costs in case of damage – without any excess
payable for the customers. Irrespective of the location of the customer, the warranty applies EU-wide without mileage limit.
� Virtual market – The used CVs are also available on the online network of TruckStore where user-friendly menu navigation and an
intelligent search function helps the customer to retrieve current vehicle photos, prices and detailed descriptions for used trucks in
15 languages
Daimler is planning to introduce its ‘Truckstore’ brand of Used Trucks business as part of
its India strategy. While it may be too early to launch such an operation, the TruckStore
business model caters to all brands of trucks – which suggests that it can be used to
exchange existing truck brands for BharatBenz trucks in the Indian CV market
� Vehicle maximum 4 years old
� TruckStore Warranty / Manufacturer warranty
� Technical inspection in line with TruckStore standards
� All necessary repairs and services carried out
� Legally prescribed main inspection new
� Fully refurbished
� Tyre tread at least 6mm
Gold� Vehicle maximum 6 years old
� TruckStore Warranty optionally
� Technical inspection in line with
TruckStore standards
� Roadworthy
� Refurbished
� Tyre tread at least 3mm
Silver� Technical inspection
� Roadworthy
� Basic cleaning
Bronze
Quick Facts of Daimler’s Used Truck business which is now a Europe-wide operation
34
FIBRESResearch
Other services…
Daimler has been offering some of the services for its Mercedes-Benz cars in
India. Some of these are likely to be adopted for its BharatBenz trucks from
2012 onwards…
� An extended warranty program beyond the standard warranty (2 years for its cars) on a
vehicle without any extra cost or mileage limitation
� An extended warranty program beyond the standard warranty (2 years for its cars) on a
vehicle without any extra cost or mileage limitation
Star Care
Program
� Similar to AMC contracts
� Offered by the authorized dealerships using the company’s genuine parts
� Covers all the vehicle’s basic service requirements as prescribed by the company
� Can be availed by paying a defined amount according to the vehicle model, contract
period and vehicle mileage
� The service package is transferable from one customer to another during the contracted
period
� The benefits can be availed at any of the company’s workshop across India
� Helps in improving the retention value of the vehicle
� Similar to AMC contracts
� Offered by the authorized dealerships using the company’s genuine parts
� Covers all the vehicle’s basic service requirements as prescribed by the company
� Can be availed by paying a defined amount according to the vehicle model, contract
period and vehicle mileage
� The service package is transferable from one customer to another during the contracted
period
� The benefits can be availed at any of the company’s workshop across India
� Helps in improving the retention value of the vehicle
Star Ease
Service
Package
� Has been bundled with any new Mercedes-Benz car purchase since 2010
� Covered for a 3 year period, for a 24x7 assistance
� Can be used in the times of breakdown or accidents
� Services available like vehicle towing, replacement vehicle, medical coordination, taxi
service, mobility benefit like air travel and hotel accommodation etc.
� Has been bundled with any new Mercedes-Benz car purchase since 2010
� Covered for a 3 year period, for a 24x7 assistance
� Can be used in the times of breakdown or accidents
� Services available like vehicle towing, replacement vehicle, medical coordination, taxi
service, mobility benefit like air travel and hotel accommodation etc.
Mercedes-
Benz
Roadside
Assistance
35
FIBRESResearch
� More business control to dealerships
� Visibility of stocks and lead times
� Single window interface encompassing modules of DMS,
CRM & Workshop Information systems, Ordering etc.
� Focus on floor skill enhancement
� Mechanic Training & Empowerment
� Sales Man Empowerment
� Facilitative margin and incentives systems
Further, Daimler plans to leverage Indian IT edge to deliver
user friendly front-end for dealership systems & processes…
BharatBenz plans to
install some of the IT
processes for easy
workflow and with an
aim to have zero
defect operations…
Integrated web
application1Touch screen
enabled2Animated Training
Module3Multilingual Voice
Over4
Multilingual Service
Manuals53D Optimized Parts
Catalogues6
Accident Repair
Search Module7
DMS Integrated
Damage Code8
36
FIBRESResearch
Implications – emergence of a ‘new middle market’ where
BharatBenz plans to create its place…
3 key strategies of BharatBenz to establish itself in the Indian CV space:
� Aggressive target pricing so as to compete effectively with entrenched competitors like Tata Motors
and Ashok Leyland
� Focus on Customer Service from the beginning to differentiate with the existing CV majors and
establish its brand
� Placing products in the ‘new middle market’ which are just about 5-10% costlier but with high-end
features and higher HP engines (for faster turnaround time) – unlike Tata Prima, Volvo FH etc. which
comes in at a very high premium pricing (almost 2-3 times of the basic / conventional CV range)
Basic CV market
New Middle market
Premium CV market
Current Tata & AL models
BharatBenz models planned
Tata Prima, Volvo FH, MAN
Emergence of a ‘new middle market’ – where BharatBenz plans to establish itself
Source: FIBRES Research
Rs.15-18 lakhs
Rs.18-22 lakhs
Rs.30-45 lakhs
New Middle market:5-10% premium pricing over the existing basic models
M&HCV price range
37
FIBRESResearch
Why BharatBenz is a threat?
But what is critical for Daimler is the right execution of this strategy!!
Strong recall of the ‘Benz’ brand name in the minds of the customers – especially in the
South since Tata trucks previously were called as ‘Benz’ trucks
Competitive pricing strategy aided by high localization etc.
Reach-out Marketing strategy – Also, we understand that they have been pitching to the
freight operators that though BharatBenz trucks will be 10% more expensive than
competition, running costs over a 5 year period will be 20% lower. Further, we learn that
they have even met the top 100 operators and understood their requirements.
Advantage of the global trucking experience backed by global technology
Additionally, Daimler has gained experience of the Indian psyche through their Mercedes-
Benz car business for the last 15+ years
Changing paradigm – Last but not the least, changing 2nd generation Indian mindset with
more importance towards after-sales service than just the product brand can erode Tata’s
‘brand’ competitive advantage and make it vulnerable to the emerging global competitors
Some of the key reasons are…
38
FIBRESResearch
So what does the SWOT of BharatBenz tell us?
THREATS
� Investment risk – as it has taken a leap of faith in a
duopolistic Indian CV market where no global
player is able to establish itself as yet
� Execution risk – Daimler must ensure that all the
elements of its strategy must get well executed.
Else, its bold attempt can prove to be a big setback
which may floor Daimler for a long period of time
� Timely aggression from the Indian CV players
OPPORTUNITIES
� Upgrading the Indian CV operators by creating the
new-middle market through provision of global
technology at a marginally premium priced products
� Participation in one of the world’s largest CV market
� If successful, Daimler can get a strong foothold in the
rapidly growing Indian CV market
WEAKNESSES
� Lack of Indian market experience and knowledge
� Unproven products given that they are tweaked for
the Indian market
� Lack of strong and established sales and service
network
� India operations have been built from scratch, with
no readily available global blueprint for help
STRENGTHS
� ‘Benz’ brand recall among many sections of the Indian
market – should make BharatBenz easy to establish
itself
� Aggressive pricing may allow it to compete
meaningfully with entrenched players
� Backed by global technology
� Changing paradigm – with customers willing to
experiment may support its entry in the Indian market
Source: FIBRES Research
SWOT Analysis of BharatBenz
39
FIBRESResearch
Conclusion – What Tata Motors should do??
� Lead in creation of the ‘new-middle’ market by launching new products in that segment well ahead of
its competitors – thereby bridging the gap in the product portfolio on time. One way of doing this would
be to consider the stripped-down version of the Tata Prima range of premium trucks by making many of
its key features as optional than a standard fitment. Another benefit of doing this will help the company
to upgrade the customers step by step from the ‘Basic CV’ products to the ‘New-Middle’ products and
then further to ‘Premium CV’ products – will eventually help in retaining customers for a longer term.
� Focus on ‘Services’ to sustain brand advantage. As the paradigm changes, the modern customer
has started looking beyond just the product brand and into the consumer experience brand. This is
visible in the second generation of customers who have shown their willingness to experiment with a
new brand while making ‘Services’ as one of its key consideration of his brand purchase decision. With
the new entrants in the CV market plan to focus and market their services along with their products, it is
imperative for Tata Motors to focus on its ‘Services’ not only as a revenue earner but more importantly to
sustain its brand advantage which it has built around the product till now.
� Continue to build and maintain a strong relationship with the channel partners – lest they may
jump over the ship and move towards new entrants like BharatBenz etc.
We leave you with just 3 thoughts to ponder over…
~~~***~~~
40
FIBRESResearch
THANK YOU!!THANK YOU!!THANK YOU!!THANK YOU!!