Focus on strengthening the dealer network resulting in market share growth
PUERTO VALLARTA, Mexico – Daimler continues to grow its share of the Mexican truck market, in large part due to a strengthening of the dealer network.
The company now controls 36.2% of the Class 8 market in Mexico, up about 7.8% compared to last year, according to Stefan Kurschner, president of Daimler Trucks Mexico, who gave a business update here today. Daimler set out to become the industry leader in Mexico and has achieved its goal.
“We feel that above 36%, we can claim market leadership,” Kurschner said. “I don’t want to be arrogant about those numbers. It is a lot of confidence a lot of new customers have put in us. It’s a journey. We are on a road to leadership and that’s what we are going to continue.”
There is plenty of room for growth in the Mexican market, according to Kurschner. Today the Class 8 market represents about 30,000 trucks a year and is growing at a pace of about 18% annually. But that’s not enough, Kurschner said, given the size of the country and the age of the fleet. The average Class 8 truck in Mexico is 17.8 years old and there are 150,000 trucks in the country 20 years or older.
“I think an economy of this size should have a market of at least 60,000 and not 30,000, as it is represented today,” Kurschner said.
A scrapping program that provides incentives for replacing older trucks has been reasonably successful, Kurschner said, and needs to continue and expand. Daimler has sold about 1,000 new trucks through the program, which benefits the environment.
One key differentiator for Daimler in Mexico is its strategy of peso pricing. Traditionally, all OEMs in Mexico priced their vehicles in US dollars, complicating the sales process and putting customers at the mercy of unpredictable swings in currency. Trucks are now priced in pesos and prices are guaranteed for six months.
“It takes uncertainties from our customers away and we are going to continue that,” Kurschner said. “This is not an incentive program or a marketing gag.”
Dealers representing Daimler’s dealer council said at the briefing that peso pricing has been well received by customers since its implementation last year.
“Our customers can truly forget about the exchange rate and have certainty and standardization,” said Fernando Zapata, president of dealer Zapata Camiones.
“The dealer network said we need to do something, uncertainty really hinders our customers to do business. So, we did a lot of customer interviews and after realizing a lot of our customers have their revenues in pesos, it was a clear decision if they bill in pesos, they want to pay in pesos,” Kurschner said.
Zapata said other OEMs have attempted to copy the idea, but without success. Daimler has financial instruments at its disposal and the ability to hedge – tools that a fleet itself is unable to utilize.
The Mexican dealer network has modernized its processes and now works together as a cohesive unit across the country to better service customers. A key element to this is the so-called Mutual Promise, which all dealers commit to.
“It’s a document the dealer network and the OEM has signed that has a description on what we are going to deliver as a service experience to our customers,” Kurschner explained. “It’s a customer bill of rights, a promise of what we are going to do for the customer.”
Traditionally, according to Zapata, dealers were focused on serving only their own customers. Now a customer can expect the same service levels at any dealer in the country.
“The same service and same quality and same conditions negotiated with every single dealer, wherever he goes in the country,” Zapata said. “That is amazing.”
Alejandro Rivera, president of the dealer council and head of Camiones Rivera, said dealers have implemented new platforms so they enjoy better communication between dealerships and with the OEM. An Evolucion Elite program has also been implemented, recognizing dealers that have taken steps to improve processes.
Repair times was an issue in Mexico, with the average repair as recently as 2013 taking nine days to complete.
Jaime Tamez, president and CEO of dealership Difrenosa, said that has been driven down to less than three days and in most months this year, his dealerships have completed repairs on average in about a day.
“Our objective as a dealer network is to keep clients’ trucks on the road. We have done a lot of work behind the scenes to achieve this,” said Tamez.
One enabler has been 24/7 parts delivery. In 2014, Tamez said, the parts distribution center would send out one shipment per week. That increased to three a week in 2015 and now, deliveries are made daily.
“It means in many cases a huge difference for customers and also for dealers, because we have an opportunity to keep our inventories rotating and our customers much more satisfied,” Tamez said. “For every specialized part, we have a delivery 24 hours later. I can say this is a big accomplishment in the last few years.”