Truck Sales Headwinds Don't Daunt Daimler Trucks North America

[kscarbel2]

Heavy Duty Trucking / October 2, 2016

Despite a challenging truck sales environment and not hitting a few goals laid out last year, Daimler Trucks North America is still confident it can remain the industry leader in this “new normal” environment, president and CEO Martin Daum told reporters at the American Trucking Associations Management Conference & Exhibition Monday.

In DTNA’s annual roundtable, Daum said the company’s projections a year ago for growth in 2016 “were much more optimistic” than reality, but the company, which sells Freightliner and Western Star trucks, is looking for a turnaround in truck sales in mid-2017.

“We are facing some headwind,” Daum said in a bit of understatement, noting that the company is now projecting that 2016 Class 8 sales in the U.S. will be around 184,000, down 26% from 2015’s 249,000. Looking at Class 6-8, that number is projected to be down 16% to 304,000, reflecting a stronger Class 6 and 7 market.

“The big question is, how will it go into next year,” Daum noted. “We think by mid year (next year) the speed will pick up again but not enough to compensate what we lose in the first half. We see next year at the same level or a little lower but with a positive outlook into 2018.”

Nevertheless, Daum said, DTNA continues to hold the lion’s share of the market, with 42% of the U.S. Class 8 sales as of August, up 1.7% from last year.

One of the reasons for Daum’s optimism is the next-generation Freightliner Cascadia unveiled last month.

“A lot of times you announce something as a new truck and it’s just a facelift. But here we really, from the ride to the electronics to the cab, we really really changed a lot. The truck really is awesome, it’s better than we expected.”

The roundtable covered a wide range of topics:

GHG Phase 2 regulations
Daum called the new Phase 2 greenhouse gas/fuel economy regulations unveiled by the EPA and NHTSA this summer “challenging but achievable” and “a tough but management compromise.”

“When I summarize why we are so positive about the rule, it gives us the flexibility how to achieve the targets — we didn’t want mandated technology. And we have the lead time. It’s not that you have to do something tomorrow. so you have time to really study, plan, test, push. Long term planning gets rewarded. And it gives us certainty, with clear targets between now and 2030 for each vehicle and engine category.”

This should help avoid the disruptive pre-buy cycles that plagued the emissions regulations of the 2000s, he said, noting that we are still seeing the “aftershocks” fro the huge oscillation after the 2006 prebuy.

Connectivity game-changer
While a lot of the buzz in the industry and outside of it is focusing on autonomous vehicles, Daum said connectivity and analytics are what are truly the game-changer for fleets. He pointed to Detroit Virtual Technician, noting that customers now say they can’t live without it.

“Welcome to real connectivity,” he said, pointing to enhancements to Detroit Connect suite of connected vehicle services.

DTNA announced that AT&T will provide Internet of Things connectivity for the new Detroit Connect Truck Data Center platform. Exclusive to the new Freightliner Cascadia, the platform features communications hardware that will deliver new capabilities for Detroit Connect, including Detroit Connect Remote Updates, which enables over-the-air engine programming and powertrain electronic firmware update capabilities for customers, as well as the ability to integrate third-party telematics applications.

Daum noted that Detroit Connect is now a five-year standard base package, and predicted that even second owners will be using it beyond that.

For the next year, Daum said he is going to challenge his team to launch “unexpected killer apps.”

As for autonomous vehicles, even though DTNA has been a leader in demonstrating these technologies, he noted that what will happen with the regulatory framework is not very clear. While government and industry worked together to come up with a compromise on the greenhouse gas rules, he said, that’s easier because we’ve been dealing with emissions regulations since the late 1990s, and because there are concrete goals as far as reductions in C02 and improvements in fuel efficiency.

“But autonomous is far more elusive. A, we don’t know yet what all is possible. … then you have the passenger car industry big time in it, we are coming from a completely different mindset than the passenger car guys.” Even the ambitious startups, he said, don’t seem to be thinking in terms of heavy trucks driving autonomously in cities, unlike some of the automotive technologies. “We think of going from the outskirts of Las Vegas to the outskirts of Chicago, potentially having the driver sleeping.

“With GHG we have clear targets, but with autonomous i would say it’s too blurry…. at the moment we are still in the exploratory phase.”

Some things need work
Daum candidly acknowledged that a couple of areas need more work, including its customer service initiative, and the fact that the uptake so far on the new DD5 medium duty engine has not been as high as hoped.

It’s one thing to talk about improving the turnaround of truck repairs at dealerships, Daum said, and another to meet concrete metrics set forth in its Express Assessment and Elite Support programs.

“As a technology-driven company it’s important to me we have true metrics to measure.… for us it’s every single truck has to be back on the road in less than 72 hours and the customer knows what’s going on with his truck in the first two hours.”

The programs have seen success, moving from about 65% of trucks out in 72 hours in the fourth quarter of 2014 to 71% in the second quarter of 2016, but that’s not good enough, Daum said. The current goal is to be at 85% by the end of 2017.

One way they’re addressing that, he said, is by focusing its certification process more on attitude and continual improvement rather than “just checking the box.” He compared it to students taking an exam and getting an A on the test, but promptly forgetting what they’d learned. “I got an A+ in chemistry, but I’m not a chemist,” he noted. “That is not what we would allow for our dealers. It has to be a regular, day to day attitude.”

At the same time, DTNA is expanding its parts distribution center network to get replacement parts closer to where they are needed. A new PDC recently opened in Dallas and Daum said more network tweaks are in the works.

Moving forward, he said, the goal is to “use service as a differentiator — not just a marketing slogan. To really push the needle farther.”

As for the Detroit DD5 medium-duty engine launched this summer, Daum said there will be 500 units sold this year. “I thought we would be a little further down the road,” he said, “but it seems it takes a little longer to accustom the market to a new engine. That should be a warning sign to whoever wants to enter the North American market with a new engine — it’s not that easy.”

While the DD5 is built on a global engine platform, Daum emphasized that it is truly a Detroit engine, designed for North America.

Staying ahead of the competition
In looking at goals for the coming year, Daum took aim at both established and new-entry competitors when discussing the goal to “stay far ahead of the competition.”

“Market share is one thing, but it is more than market share,” he said. “We want to be the leading brand, the leader in technology.”

He noted that prototypes are one thing, but “between prototype and mass production and hitting the road, there are years in between and thousands of questions to be answered. We want to be the answer.” He noted that it applies to any competition, “not just established, but any newcomer.”

[kscarbel2]

DTNA chief sees slow U.S. truck sales through mid 2017

Fleet Owner / October 3, 2016

Overall U.S. retail Class 8 sales will end the year 26% below 2015.

Calling the current downturn in U.S. Class 8 truck sales “a bit unexpected,” Martin Daum, president and CEO of Daimler Trucks North America, now expects those slow sales to continue through the first half of 2017. And while he believes sales will pick up in the second half, “they won’t be enough to offset the first half, so we’re seeing 2017 as off slightly from this year,” he said at a press conference during the American Trucking Assns.’ annual management conference.

Overall Class 6 to 8 retail sales in the U.S. will end the year down 16% from 2015, with almost all of the loss coming in Class 8, according to Daum. Heavy truck sales will be off 26% from 2015 levels, he said.

With expectations that interest rates will remain relatively low and the economy will continue to register growth, Daum now sees a return to stronger Class 8 sales finally coming in 2018. Those sales will be driven by fleets beginning to refresh aging equipment, he said.

Analysts forecasts U.S. retail Class 8 sales ending the year at 210,000 trucks, down from 253,000 in 2015.  Recent calculations put 2017 sales in the range of 150,000 to 154,000 units, with a fairly strong resurgence following in 2018.

“We might have forgotten a bit about [cyclical truck-sales downturns] during the strong markets the last two years,” Daum said.  One of his goals for DTNA in the coming year is to successfully manage the market cycles no matter where the final numbers end up.

Turning to other topics, Daum called the recently release Greenhouse Gas (GHG) Phase 2 reduction proposal “challenging but achievable” by fine-tuning existing technology. He praised federal regulators for working with industry to develop a plan that gives truck manufacturers “flexibility, lead time and certainty… without surprises or disruptions.” 

While Daum doesn’t rule out any new technologies, “we definitely won’t need waste heat recovery, battery power or natural gas” to reach the 2020 to 2027 Phase 2 requirements. The required reductions in GHG emissions “are huge steps, but I’m confident we can reach them,” he said.

By comparison, the future of autonomous driving technologies is “still too blurry” for any type of definitive government regulation. “We don’t even know yet what is possible, and we have to work our way though exploring those possibilities,” Daum said.

 

[RoadwayR]

Can't help but think with the new Freightliner Cascadia Evolution and International LT coming out at the same time and going for the same market we are going to see a real horserace between DTNA and Navistar.  From what I have seen of these trucks so far I think the losers are going to be PACCAR and Volvo if they are not careful.  And I also think the DD5 and DD8 are going to cause Cummins to loose a lot of Freightliner business.

Wonder if DTNA has any desire to get into class 4/5 again (remember Sterling?).  Would be tough but the DD5 might be a good engine for that market.

 

 

 

Edited October 6, 2016 by RoadwayR

[kscarbel2]

2 hours ago, RoadwayR said:

Can't help but think with the new Freightliner Cascadia Evolution and International LT coming out at the same time and going for the same market we are going to see a real horserace between DTNA and Navistar.  From what I have seen of these trucks so far I think the losers are going to be PACCAR and Volvo if they are not careful.  And I also think the DD5 and DD8 are going to cause Cummins to loose a lot of Freightliner business.

Wonder if DTNA has any desire to get into class 4/5 again (remember Sterling?).  Would be tough but the DD5 might be a good engine for that market.

 

Paccar is already in Class 5 with the Kenworth T170 and Peterbilt Model 325.

http://www.kenworth.com/media/52627/t170-t270-and-t370-combined.pdf

http://www.peterbilt.com/products/medium-duty/325/