Daimler Truck's first strategy day took place. At this event, the company announced its operational and financial plans as well as its goals of becoming an independent company. The Board of Directors, chaired by Daimler Truck CEO Martin Daum, announced the most important financial and technological goals as well as strategic priorities at the event.
As the global leader in the commercial vehicle world in terms of sales, market shares and global reach, Daimler Truck sets off with its strong and advantageous position. Daimler Truck, which makes an average annual sales of over 40 billion Euros, sells approximately half a million trucks and buses throughout the year. With strong brands such as Freightliner, Mercedes-Benz, FUSO and BharatBenz, Daimler Truck offers a wide range of trucks and buses on all major continents. The company also; It is also a pioneer in technology in terms of safety, efficiency and electric power transmission systems.
Focusing on the future as an independent company, Daimler Truck will accelerate its strategic goals and strengthen its financial performance.
In his assessment, Daimler Truck AG CEO Martin Daum said, “Our mission as an independent company is clear; By accelerating the development of battery and fuel cell vehicles, we will pioneer emission-free transportation and significantly increase our profitability. We aim for the best numbers in every region we are in. We have to perform competitively in every region and we are ready to take the necessary measures to achieve this goal. We are ready to take tough decisions to reduce our fixed costs and further improve our financial performance.” he said.
On strategy day, CEO Martin Daum also introduced the new Daimler Truck Board of Directors, which has the qualifications and energy to bring about the necessary changes in performance and culture. These include Karin Rådström, CEO of Mercedes-Benz Trucks, Europe and Latin America Regions; John O'Leary, CEO of Daimler Trucks North America; Hartmut Schick, CEO of Daimler Trucks Asia, and Andreas Gorbach, Head of Truck Technology Group, were also present.
Daimler Truck announced its financial targets
Daimler Truck CFO Jochen Götz said that while presenting the company's financial targets, they will increase profitability and returns, and that they will create high added value for shareholders as an independent company. Daimler Truck targets high profitability and overall double-digit sales returns in all regions by 2025, given the strong market conditions.
Daimler Truck; announced that it plans to reduce fixed costs, investments and R&D expenditures by 2025 percent by 2019 (compared to 15). In order to reduce fixed costs, Mercedes-Benz trucks include new measures to reduce personnel costs by 2022 million Euros until 300, to simplify the complex structure and to provide sustainable savings such as facilitating processes. Daimler Truck will focus more on profitable segments and regions. This includes a greater focus on more profitable heavy-duty segments in key regions, shifting from traditional combustion engine investments to emission-free and globally standardized electric vehicle architectures.
Daimler Truck will also focus on growth in the after-sales market and services to increase profitability and customer loyalty. This includes traditional spare parts and maintenance services, as well as financial services such as tailor-made leasing, financing and insurance. New and rapidly growing services in digital, autonomous and electric transportation also bring additional growth potential. Daimler Truck sees a significant growth potential in the service area in general and aims to increase its service portfolio sales from 30 percent to 2030 percent by 50.
Operating in a cyclical industry, Daimler Truck therefore sets financial targets that take into account a potential spillover in market conditions, reflecting efforts to reduce fixed costs and better manage volatility. In a pessimistic scenario similar to the 2020 pandemic year, the truck and bus industry is targeting a return on sales (RoS) of 6-7 percent. In a more positive scenario reflecting a normal business year, the RoS target is 8-9 percent. In a positive scenario with strong market conditions, Daimler Truck targets double-digit operating margins.
Regional targets set
Daimler Truck has recently changed its organizational structure, giving each region more freedom of enterprise and more responsibility for product development. Each unit in the North America, Europe, Latin America and Asia regions is responsible for focusing on the best local examples for profitability. In order to make the process of profitability of regions and segments more transparent and give more responsibility, Daimler Truck will announce regional financial figures and detailed RoS targets as part of the Capital Market Day, ahead of the expected IPO in the fourth quarter.
Jochen Götz, CFO of Daimler Truck AG, said: “We need to realign profitability. We have set clear goals to reduce our fixed costs and improve growth in services. We will also use our regional strength to strengthen entrepreneurship and our financial performance.” he said.
Leader on the road to zero emissions
Daimler Truck's new CTO and Head of Truck Technology Group, Dr. Andreas Gorbach explained the fundamentals of the company's technology strategy. Daimler Truck will initially reduce investments in conventional internal combustion engines and, in the process, will do similar work with Cummins on medium-volume engines with different partners. The company is also in search of more partnerships in the field of heavy commercial vehicle engines in order to make the necessary investments together. By 2025, Daimler Truck will further reduce spending on conventional internal combustion engines and direct most of its R&D spending towards Zero Emissions Vehicle (ZEV) technologies. The company relies on both Battery Electric Vehicles (BEV) and Hydrogen Based Fuel Cell Vehicles (FCEV) for ZEV technology.
The leader in battery electric trucks
Daimler Truck offers the most comprehensive ZEV commercial vehicle portfolio among all global OEM truck manufacturers on the market with the fully electric FUSO eCanter, which it started to offer in 2017. Apart from Freightliners eCascadia and ZEVs such as the eM2, Mercedes-Benz eActros and eCitaro, the iconic Thomas Built Buses Jouley is also used in everyday life and has covered more than 10 million kilometers in customer use. Models such as the Mercedes-Benz eActros LongHaul with a range of approximately 500 km will be launched in the coming years. Daimler Truck plans to introduce a new generation of Battery Electric Vehicle (BEV) models in the next few years. These models aim for a range of up to 800 km.
To accelerate BEV growth, Daimler Truck builds on its know-how and significantly accelerates the development of eDrive technology. Daimler Truck has also announced some key partnerships in the areas of battery technology and charging infrastructure.
Important partnerships announced
Daimler Truck AG and the world-leading manufacturer and developer of lithium-ion batteries, Contemporary Amperex Technology Co. Limited (CATL) is expanding its existing partnerships. Both companies are driven by the vision of CO2-neutral, electrified road freight transport. CATL will supply lithium-ion batteries for the all-electric Mercedes-Benz eActros LongHaul. It is planned that this model will go into mass production in 2024. The supply agreement is planned to continue into 2030 and beyond. The batteries of eActros LongHaul will have features such as long service life and fast charging feature and high energy density. The batteries will thus meet the requirements of electric long-haul trucks. The companies also plan to co-develop even more advanced next-generation batteries for truck-specific applications. Advanced modularity and scalability are aimed in the developed solutions. The batteries are intended to be used flexibly for different purposes and future electric truck models.
Daimler Truck is building the charging infrastructure in key markets in Europe and North America to support the use of electric trucks. Mercedes-Benz Trucks has announced a strategic partnership with Siemens Smart Infrastructure and Engie to provide charging solutions for truck fleets in Europe. In North America, Daimler Trucks has announced a partnership with DTNA's subsidiary Detroit, with Power Electronics for consulting, installation and support for 350 kW mega-charging stations in the field.
Industry leader in hydrogen fuel cell truck development
Focusing on Battery Electric Trucks, Daimler Truck also wants to accelerate the development and deployment of Hydrogen Based Fuel Cell Trucks (FCEV). Due to the high energy density of hydrogen, short refueling times and the evolution of the hydrogen energy system in many markets, Daimler Truck believes FCEVs will play an important role in road freight transport. Daimler Truck is determined to bring these vehicles to market with the support of a cellcentric and precise technology roadmap in partnership with the Volvo AB Group.
Infrastructure is crucial for hydrogen-based fuel cell technology. Daimler Truck has announced that it will form an infrastructure partnership with Shell as part of its strategy for both BEV and FCEV vehicles. Together, Daimler Truck AG and Shell New Energies NL BV (“Shell”) want to promote hydrogen-based fuel cell trucks in Europe. The companies signed an agreement for this purpose. The partners plan to build hydrogen filling station infrastructure and make fuel cell trucks available to customers. The partnership aims to decarbonize road freight transport.
Shell plans to initially establish a hydrogen filling station network for green hydrogen between three production facilities in Rotterdam, the Netherlands, as well as in Cologne and Hamburg. Daimler Truck AG plans to deliver the first heavy-duty hydrogen trucks to customers in 2025. As early as 2025, the total length of the corridor is projected to be 1.200 kilometers.