Ambitious Goals for Global Truck and Bus BehemothTue, 09/15/2015 - 16:21
Q: What recent products has MAN Truck & Bus launched in the market and what were the main drivers behind their introduction?
A: A few years ago, the Volkswagen brand encountered a few difficulties due to the emission laws in Mexico changing from Euro III to Euro IV. During that time, we were developing technologies for Euro V in Brazil, so we did not participate as much in the Mexican market since we only had two products based on Euro IV technology. In response to this situation, we introduced the Volkswagen Constellation to cover the 13 to 57 tonne segment, and the Volkswagen Worker that is tailored to the 8 to 31 tonne category. This year we introduced the Volkswagen Delivery in order to complete the Volkswagen brand line. The Delivery is a versatile product that adapts to both rural and urban conditions, thanks to its Cummins ISF Euro V engine of 160hp and its SCR technology. With the introduction of the Delivery, we expect to grow 30% in the light commercial vehicle segment in Mexico, where 2,700 units are sold annually.
Over the next two years, MAN Truck & Bus is planning to launch around 6 new products with an investment of US$20 million that will be allocated to processes, infrastructure, and product offerings. At the moment, our production is at 50% of installed capacity so there is a lot of room to grow, and in 2016 we plan to double our production level to reach 2,000 units, annually. In July 2014, we held 1.5% market share in the truck segment, and we were in fourth place in the bus segment with a 12% market share. For 2016, we have set our sights on capturing 5% of the truck market, and 18% in the bus segment.
Q: What are the main advantages of the Volkswagen-MAN Dual Brand concept, and how has it helped MAN Truck & Bus better position itself in the Mexican market?
A: Our dual brand concept allows us to offer a varied product line that caters to a wide range of segments in the industry, easily adapting to the clients’ requirements. The MAN brand has over 200 years of history in the automotive industry, and the customers that know MAN Truck & Bus do not need to relate it to Volkswagen. On the contrary, the brand has always been associated with top German engineering. In the case of customers that might not be familiar with MAN, Volkswagen gives them the reliability and confidence that they need.
Q: How has the Mexican market responded to the chance of driving the European vehicles that MAN Truck & Bus provides?
A: One of the peculiarities of the Mexican market is that it prefers big nosed trucks with the engines at the front, since most drivers have the misconception that a long front will offer greater protection in case of an accident. However, when comparing different types of trucks in terms of technology, fuel consumption, efficiency, and overall TCO, we realized that our products are highly competitive. We have given some of our customers the opportunity to try our trucks to change their mindset about the European concept. We know that our dealership network needs to expand in order to cater to the whole country, as we only have 13 sales and aftermarket support points at the moment. Additionally, the company has introduced many innovations, such as Adaptive Cruise Control. This system automatically adjusts driving speed, as well as the distance to the vehicle ahead, in line with pre-set settings. We were also the first company to introduce Intarder transmission brakes, which slow down the truck to improve fuel consumption and parts functionality. Another interesting innovation is the retractable rear axle, which can decrease fuel consumption and improve the performance of both tires and brakes. We always adapt our products to the particularities of the Mexican market, especially when it comes to road conditions.
Q: How is MAN Truck & Bus evolving to no longer rely on foreign suppliers for key components?
A: In Mexico, 70% of our production is exported to the US, and 75% of Volkswagen’s production heads to the US as well. This has created a solid and reliable supplier base in Mexico and encouraged us to develop a strong localization program. We currently source 20% of our components locally, but we want to reach 50% by the end of 2017. Our potential suppliers must go through quality testing where we evaluate their design, production, and development processes. An important part of our US$20 million investment will be allocated to the development of the local supply chain.