Daimler India CV suffers no dent in profitability despite a slowdown in industry, plunge in sales

Our Bureau Chennai | Updated on February 26, 2020 Published on February 26, 2020

Satyakam Arya, MD & CEO, Daimler India Commercial Vehicles   -  Bijoy Ghosh

Eyes new revenue streams and foray into off-highway, defence segments

Daimler India Commercial Vehicles (DICV), the truck and bus manufacturing arm of Germany’s Daimler AG, remained profitable during 2019 and is gearing up for a new growth phase with a multi-pronged strategy. This includes foray into adjacencies, network expansion, offering connectivity solutions and investment in new business areas.

Though DICV’s total sales of BharatBenz trucks fell 36 per cent to 14,474 units in 2019 amid an unprecedented slowdown in the commercial vehicles market, the company stayed profitable with revenues of about ₹6,300 crore. In 2018, the company achieved an operational breakeven for the first time.

“Managing the situation in the domestic market without resorting to discounts, pushing exports (which grew 14 per cent in 2019) and cost restructuring enabled us to stay profitable in these market conditions,” Satyakam Arya, Managing Director & CEO of DICV, said here.

DICV is confident of maintaining profitable growth going forward. In 2020, it aims to report some growth in sales, supported by network expansion and differentiated offerings in the BS-VI trucks space. These trucks will offer 10 per cent more fuel efficiency, six per cent lower maintenance cost and early breakeven, and come with a host of connectivity solutions.

While it seeks to strengthen its trucks business, which is cyclical, the company also plans to tap the opportunity in allied business segments such as off-highway and defence, in order to derisk.

Awaiting easing of norms

DICV is looking to supply its locally produced 4 & 6-cylinder engines to off-highway customers and is presently engaged in discussion with a few companies. The company is looking to cater to the defence sector’s requirement for 4X4 vehicles.

While it has started developmental work, it awaits a change in regulation which will allow companies owned by foreign entities to supply such vehicles. “Since a truck of such nature is not a strategic asset and is used more for carrying a missile or other defence equipment, the government has indicated that it would relax the norm,” said Arya.

DICV will continue to expand its network, which swelled by 30 per cent during the slowdown hit-2019 to reach 236 outlets. It expects the number of outlets to increase by 25 per cent during 2020.

The company sees digitalisation as a game-changer, both from a cost and competitiveness perspective. With a 360-degree approach, it has drawn a digital roadmap aimed at giving a seamless experience to customers, while making the internal processes more efficient. “Digitalisation also helped in bringing down the cost to maintain profit in 2019,” stated Arya.

To create new revenue streams, DICV is closely evaluating opportunities in the freight aggregation space, which is seen as a fast-growing segment and could be a big enabler in future to penetrate the market.

Thomas Fricke, Managing Director, Daimler Buses India, said the company reported the best-ever performance with 11 per cent rise in domestic sales and a 56 per cent increase in exports. The company sees a bright outlook for its bus business too.

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Published on February 26, 2020
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