Daimler Trucks sets out strategy

Daimler Truck has hosted its inaugural Strategy Day, setting out its ambitions as an independent company.

Daimler Truck‘s management board led by CEO Martinaum has presented strategic objectives, key financial targets and technological goals aheead of its planned flotation by the end of the year.

The unit is targeting benchmark margins in each region, and an overall double-digit operating margin for the new group by 2025, in a scenario with strong market conditions.

There’s also an ambitious technology roadmap for both battery (BEV) and fuel-cell electric vehicles (FCEV), with up to 60% of sales ZEV by 2030.

Multiple new technology partnerships announced: Advanced battery development with CATL, high speed charging with Power Electronics, Siemens and Engie and a 1200km ‘hydrogen corridor’ in Northern Europe with Shell.

Daimler said the separation and stock market listing for Daimler Truck is on track; completion is expected by year end 2021.

Daimler Truck generates over €40bn of revenue and sells over half a million trucks and buses in a typical year. With strong brands across all major continents like Freightliner, Mercedes-Benz, FUSO and BharatBenz, Daimler Truck says it offers the industry’s widest range of trucks and buses.

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By GlobalData

Looking ahead, an independent Daimler Truck will accelerate its strategic ambitions and address its financial performance, it said. While Daimler Truck is a powerhouse in North America, dominating the region with a 40 percent market share in the heavy duty segment and benchmark profitability, its recent record in other market regions is less satisfactory. The inconsistent regional profitability records of Europe, Brazil and Asia need to be improved significantly, Daimler said.

“Our mission as an independent company is clear: Our ambition is to lead the way to zero emissions in the trucking business by accelerating the development of battery and fuel cell vehicles. And we will reset profitability. We will target the benchmark in each region. Every region must deliver competitive performance and we are willing to implement the measures necessary to achieve this goal. We are willing to take hard decisions to lower our breakeven and raise our performance,” said Martin Daum, CEO of Daimler Truck AG

Daimler Truck announced that it will reduce fixed costs, capex and R&D spending by 15% by 2025 (vs. 2019 actuals). Fixed cost reduction will include a personnel cost reduction target for Mercedes-Benz Trucks of €300 million by 2022, and new measures to reduce complexity streamline processes and drive sustained savings. Daimler Truck will also intensify its focus on the most profitable segments and regions. This will include a ‘clearer emphasis’ on the more profitable heavy duty segment in the main regions, and refocusing investments from ICE powertrains towards zero emission and standardized global EV architectures.

Daimler Truck also said it will put further emphasis on the growth of its aftermarket and services revenues to drive profitability, and customer retention. This includes the traditional spare parts and maintenance service business, and also financial services like tailor-made leasing, financing and insurances. New and fast growing services in the fields of digitalized, autonomous and electrified transport offer additional growth potential. Overall, Daimler Truck sees significant growth potential in services and aims to increase the revenues on the service portfolio from the current 30% towards 50% in 2030.

Path to zero emissions

Andreas Gorbach, the new CTO and Head of the Truck Technology Group, set out the premises of the Daimler Truck technology strategy: First of all, the company will ramp down internal combustion engine (ICE) powertrain spending and work with partners. For instance, Daimler Truck is already partnering with Cummins for medium duty engines. In addition the company is actively seeking additional partnerships in the heavy duty engine sector to share necessary investments. Daimler Truck will further reduce spending in conventional powertrain and redirect the vast majority of R&D spending to ZEV technologies by 2025. For ZEV technology, the company is committed to both battery-electric vehicles (BEV) and hydrogen solutions.

Having started with the fully electric FUSO eCanter back in 2017 Daimler Truck has established the broadest portfolio of ZEV commercial vehicles of all global Truck OEMs. ZEVs such as Freightliner’s eCascadia and eM2, Mercedes-Benz eActros and eCitaro and the iconic Thomas Built Buses Jouley are already operating on a daily basis and have driven more than 10 million kilometers in customer hands. Further products such as a 500km range eActros LongHaul will be launched in the coming years. With a dedicated next generation BEV truck planned for the coming years, Daimler Truck is aiming for a range capability of up to 800 km.

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