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Robert Veit, executive vice-president of Daimler Trucks China.
Many Chinese customers believe that imported Mercedes-Benz trucks are beyond their price range, but Robert Veit, executive vice-president of Daimler Trucks China, is hoping to change their minds.
As an international truck expert, Veit is convinced that because of their high quality, fuel efficiency and reliability, Mercedes-Benz trucks are actually among the products with the best value for the money in terms of total cost of ownership (TCO), which takes into account the full range of costs over the lifecycle of a truck.
"If you want to judge whether a Mercedes-Benz truck is worth the investment, you have to break it down across the total cost of ownership," he explained.
According to Veit, in a typical three-year business case, the purchase price of a truck accounts for only 10 to 15 percent of the total costs. The majority of costs are generated after the purchase of a truck, including fuel, repairs and maintenance, as well as associated costs such as road tolls and insurance.
Reliability, safety, and intervals between maintenance are very important. "Having a truck in a workshop instead of on the road will end up costing you a fortune. Not only are you paying for repairs, the truck is not being used and therefore not generating revenues, so you are drowning your business performance."
Mercedes-Benz Trucks is therefore encouraging local customers to adopt a different way of thinking.
"Customers in China still look at the purchase price, but when your attitude is 'the cheaper the better', you will get what you paid for." That's why Veit believes his task in China is not just to sell trucks, but to advise, coach and train.
Given his international experience, he understands why Chinese customers are currently more sensitive towards the purchase price instead of thinking in terms of TCO.
He notes big differences between China and more mature markets.
"In Europe fleet contracts are usually long-term, whereas in China they are often shorter, sometimes as short as one year. In this situation, there is a temptation to buy the cheapest product to make business immediately profitable," Veit explained.
Another major difference is that while truck drivers are still easy to find in China at the moment, in Europe it is very difficult.
"In Europe, the drivers play a very important role in selecting their preferred trucks based on safety, comfort, and ease of operation, but in China, the driver's opinion is not considered."
But all this is changing as China begins to professionalize the logistic industry.
"If you want to reduce operating cost, you need to have good drivers, and to get good people, you have to offer something safer and more comfortable," Veit said.
Mercedes-Benz Trucks is also providing practical tools to help fleet operators better control their costs and improve efficiency in logistics.
"The logistics industry in China definitely has room for improvement in efficiency," Veit said, noting that logistics costs account for around 8 percent of GDP in the US and around 10 percent in Japan and South Korea, whereas in China the ratio is more than 17 percent.
To improve fleet efficiency, Mercedes-Benz Trucks offers the FleetBoard fleet management system on all tractor units sold in China.
With centralized monitoring and coordination for an entire truck fleet, FleetBoard maximizes average trip length and uptime of each truck, and promotes more fuel-efficient driving behavior to save fuel costs, leading to maximum profits.
Noting one specific case study in China, Veit added, "FleetBoard has proven to achieve dramatic fuel savings for a major customer in Tianjin."
"We can be a very effective messenger to the Chinese logistics industry, giving them insights into how other markets operate more efficiently," Veit added.
Last week for example, the company hosted a logistics forum in Guangzhou, inviting operators and sharing success stories and experiences with the attendees in addition to discussing current issues that the company has observed in China.
"We had a lot of very positive feedback and will continue to hold these types of forums as part of our continued commitment to China," Veit said.
A sophisticated sales and service network is another competitive advantage for Mercedes-Benz Trucks in China over other imported European truck brands.
Already the largest with 41 workshops servicing its population of over 23,000 trucks in China, the network is likely to expand by 20 percent next year.
On top of this, Mercedes-Benz Trucks enjoys a synergy with its successful passenger car arm that no other brand has, using five warehouses in the Mercedes-Benz network for parts distribution across China.
The truck division also leverages Daimler's captive financing company in China to offer attractive financing and leasing services for truck buyers with lower down payments and up to 48-month installment plans. Business owners can manage their cash flow more effectively and add more vehicles to their fleet to develop their business, or dedicate their cash to other areas of investment
Mercedes-Benz Trucks sold about 5,800 units in China last year, leading the high-end heavy-duty truck segment for the fifth year in a row.
With the largest spectrum of homologated products among European truck brands, Mercedes-Benz trucks are well positioned in the high-end segment, especially in the niche segments such as utility vehicles for municipalities.
Recognizing the importance of meeting local demands, Mercedes-Benz Trucks also customizes products to suit local markets.
"A good example is FleetStar, a product tailor-made for the Chinese market and priced 15 percent below competing products, which allows more Chinese customers to enjoy the benchmark quality and services of Mercedes-Benz trucks," Veit said.
Although occupying more than half of the high-end heavy-duty market, Veit seems more focused on customer satisfaction, stating that "to increase our truck population and have happy customers coming back to us is what really drives us forward in this challenging business."
Despite a recent dramatic decline in the heavy-duty truck segment overall, Mercedes-Benz Trucks is expected to wrap up another record year in China, Veit noted.
Veit is very optimistic about the future.
"As the market continues to evolve in China, Mercedes-Benz trucks will consolidate their position as an excellent choice for customers. We believe that over the next year, especially in the second half of 2013, China's heavy-duty truck market will recover, and as this recovery picks up speed we are well positioned to further improve our performance as more and more fleet owners realize the benefits of owning a Mercedes-Benz truck."
Fleetstar, tailor made for Chinese market, allows more Chinese customers to enjoy the benchmark quality and services of Mercedes-Benz trucks.
(China Daily 12/03/2012 page19)