Daimler Trucks seeks to cut dependence on Europe with India push

FRANKFURT Mon Feb 24, 2014 8:52pm IST

1 of 2. An employee walks inside Daimler's factory in Oragadam, in the Kancheepuram district of Tamil Nadu April 18, 2012.

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FRANKFURT (Reuters) - Daimler (DAIGn.DE) executive Wolfgang Bernhard said on Monday he was cautiously optimistic about the outlook for the trucks business in 2014 thanks to new sales growth coming from emerging markets such as India.

"We will use India as an export base for other markets in Africa and Southeast Asia," Bernhard told a press conference in Stuttgart, Germany.

In the second quarter of 2013, Daimler's plant in Chennai, India began manufacturing FUSO brand vehicles for sale in selected export markets in Southeast Asia and Africa.

This export capability is expected to continue in 2014, Bernhard said.

An additional model made by Daimler's BharatBenz venture is set to be launched on the Indian market and is expected to make a key contribution to sales growth in Asia.

Daimler said of the 484,000 trucks it had sold in 2013, 13.6 percent came from Western Europe, 9.5 percent from Latin America, 27 percent from sales in the North American Free Trade AREA (NAFTA), and 34 percent from Asia.

Global demand for trucks will rise from 2.5 million in 2012, to more than 3 million in 2020, and the main growth driver will be emerging markets, Daimler said.

Daimler has traditionally relied on a strategy of selling stripped down versions of high-end European trucks in some emerging markets like Brazil and Argentina.

But some of the emerging markets are not suitable for "trickle down" sales of modified European products because they remain too expensive even in stripped-down versions, so Daimler is now developing a new range of vehicles.

Since May 2013, Daimler India Commercial Vehicles (DICV) has produced trucks for export to growth markets, working with its Japanese subsidiary Mitsubishi Fuso Truck and Bus Corp and BharatBenz.

Mercedes-Benz modified its Axor truck, originally made in Turkey, to become an affordable product in South Asia and Africa, Bernhard explained.

Daimler has now become the fourth-largest truck maker in India, a market dominated by rival players Ashok Leyland and Tata.

Overall in 2014, Daimler Trucks plans to achieve a substantial increase in earnings before interest and taxes when compared to 2013 thanks to higher sales and further gains in the Daimler Trucks efficiency programme.

Daimler is targeting cost savings of 1.6 billion euros by 2015.

Daimler Trucks reiterated medium-term goals to reach sales of more than 500,000 units in 2015, and sales of 700,000 units in 2020. The division seeks to record an average return on sales of 8 percent.

(Reporting by Edward Taylor, editing by David Evans)

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