Forging a Niche AMIDST Strong CompetitionMon, 09/01/2014 - 11:00
Q: What have been the hallmarks of Scania’s strategy to succeed in Mexico?
A: The consumer market in Mexico is unique in that a lot of customers want to buy directly from the OEM rather than going to a dealer. This highlights one of the problems with the local industry, which is poor aftersales service. In Mexico, going to the dealer for parts often poses a challenge since much of the attention is on the sale and not on the service. In response, we have developed a strategy for the service side that focuses on the needs of the customer. We started this slowly as, at the beginning, we did not have a presence in the big fleets, only with smaller customers. That factor actually helped us during the economic crisis of 2008 as we were not dependent on any one large customer. But now, by focusing our attention on tailor-made solutions for transportation companies, we have managed to obtain a leading market share over the last two years. Nobody believed that Mexico had any major potential for Scania, but we have now established an interesting market presence with very few resources. Brazil and Mexico are now competing to be the number one market for Scania’s buses worldwide.
Q: How much of a challenge was it to gain visibility in this market?
A: Our operations in Mexico began in 1995, where we established an assembly plant in San Luis Potosi. The brand was originally not represented in the right way and this created a poor perception among our target clients. Considering this factor, Mexico had begun to look like a market which posed more difficulties than opportunities for us. Heavy duty brand names like Kenworth, Freightliner, and Navistar dominate 95% of the heavy vehicles sector in Mexico. This is why we decided to focus on buses instead. This has been a new journey for the group but tailoring our strategy for a specific market has given us more visibility. Scania’s brand presentation today is completely different, which was achieved through our attention to aftersales service. It is very easy to lose a customer but it is quite hard to win a customer, especially a large fleet owner. There are groups in Mexico that have fleets of 9,000 vehicles or more. When a company of this size is used to using only one or two brands, it needs to be convinced of the value of trying something new. We have now established ourselves and we are recognized as having a good product and excellent aftersales service. Scania vehicles have always been very good when it comes to fuel consumption, which is vital in Mexico given the distances the country’s buses have to travel. An average bus in Mexico travels approximately 25,000-30,000km per month, which is huge when compared to developed economies. There are other factors to consider such as altitude, climate, routes, road types, and PIT parameters. Our experience has taught us that our products need to conform to the environment they operate in. As such, we have been adapting to the technical necessities of the Mexican market since 1995.
Q: How does the Mexican bus market stand out from other markets Scania is present in?
A: In many ways, the coach industry is actually more developed than in some European countries. Every time we receive industrial visits from Europe, people are surprised at the sophistication. But this is not so surprising when you realize that 98% of people travelling around the country use bus transportation. We will of course have to see what impact the Fiscal Reform will have throughout 2014. A lot of clients think that in-sourcing their servicing is the best way, but it really is not the most efficient method Technology is moving quickly and servicing is more difficult than it was ten years ago, you need the right tools and the right training. It is not only changing oils, filters, and maintainance, it is really about understanding the complete technology. Individual TV screens, for example, create a headache on the technical maintenance side.
We also do not have a specific production line for Mexico today, while we have a very standardized way of producing our products. However, some specific components were required for this particular market, which were born here and then incorporated into our global manufacturing processes. Working in Mexico therefore turned out to be a very good field test for Scania. Both Brazil and Mexico present tougher conditions than Europe, and although Scania is a global company with a 120-year history, we are still discovering and innovating due to all the countries we work in. We cannot copy and paste parameters and concepts that are working in Paris or Finland in Venezuela or Mexico.