Gas-Powered Vehicle Future of Mexican FleetsMon, 09/01/2014 - 12:10
Q: How has Hyundai approached the challenge of being a relatively new arrival in the Mexican heavy vehicle sector?
DG: Being a new company in Mexico poses the challenge of how to best open the market and communicate the quality of our products to prospective customers. Hyundai Truck & Bus began operations with two models four years ago: the Aero Town, which has a length of 9m from bumper to bumper, and the Super Aero City. We are now offering more than 20 models in Mexico and expect to sell 1,000 buses and trucks in 2014. On top of that, we are now assembling these vehicles in Mexico and given how the market is growing, we expect a 10-15% increase in sales in 2015. We are the first company in Mexico working with natural gas. The company is taking orders in Mexico City, Monterrey, and San Luis Potosi for trucks and buses. Clients like FEMSA, Grupo Bimbo, and Jumex are already ordering our trucks, although our work with these companies is the first step in a trial process. We hope that by next year, we can start working with other companies.
Q: How can your value proposition lead customers to change their brand allegiances?
RH: The 80,000 buses that circulate in Seoul, South Korea, virtually all run on natural gas, and Hyundai makes 70% of these buses. We are offering exactly the same product in Mexico, combining a steel body with a gas engine. This combination is as efficient as an aluminum bus with a diesel engine, whilst being more durable and reliable. We have beaten the competition when it comes to efficiency, and we are improving the Mexican market by putting technology to the service of the users, yielding economic benefits for the owners of the vehicles and helping to reduce pollution.
Q: Is it difficult to establish partnerships as a recent arrival in the market?
RH: Each company has a preference when it comes to partnerships. For instance, Marcopolo works with MercedesBenz and Navistar works with Ayco. Hyundai Truck & Bus mainly works with a Korean bodybuilder but we also have a Mexican bodybuilder near Acapulco, Carrocerías Diamante. We chose this partnership because it provides a local option for this type of service. It would be beneficial for us to establish more local partnerships like this. Beccar, for example, is located near Guadalajara but most of its customers are in Culiacan, Hermosillo, and Tijuana. For this strategic reason, we are looking to get closer to Beccar.
Q: What were the main results of the pilot program with RTP?
DG: RTP launched a pilot program for a CNG fleet in Mexico City. The local regulations changed as a result of the program’s success. In the past, allowing a bus to run on CNG was experimental but it is now commonplace and anybody can switch from diesel to CNG. Since air pollution is highly responsible for health problems, it is in the government’s best interest to reduce harmful emissions and CNG vehicles can help achieve this. Hyundai Truck & Bus and CANACINTRA have also been discussing plans to change the microbus fleet in Mexico City and its metropolitan area. We succeeded in convincing public officials that natural gas was a viable fuel. We also asked for certain of the safety features present in our buses to become standard in Mexico, such as ABS and floor height, which are voluntary at the moment. We are receiving more orders as clients in the public sector can now attest to the quality of our products. RTP is the biggest bus company in Mexico with almost 1,500 vehicles and it has a high replacement rate. We currently have orders for 40 natural gas vehicles and 80 diesel vehicles from RTP. People from Guadalajara, Monterrey, Chihuahua, and the State of Mexico are asking for data on our company because of the innovation we are bringing to the Mexican market.
Q: How much potential do you see for this segment to grow in the next five years?
DG: Mexico is increasing its capacity to import cheap natural gas from the US. We are seeing significant infrastructure developments that will increase the availability of natural gas from the northeast region all the way down to central Mexico as well as the Pacific coast. With these major pipeline developments, Mexico will have sufficient gas supply to cater to demand in the next five years. We are happy to be at the very beginning of a promising market, and we expect enthusiasm for the gas vehicle market to increase over the years.