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Hino Keeps Eye on 10 Percent Share

Harumasa Suzuki - Hino Motors
Director General

STORY INLINE POST

Thu, 09/01/2016 - 20:43

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Q: When does Hino expect to reach its targeted 10 percent market share in Mexico?

A: We expect to reach this target by 2020. Hino’s participation remained static at 4 percent from 2012 to 2014. In 2015, the company achieved a 3.3 percent increase, landing a 7.3 percent overall market share. Although this growth was not considerable, the segment did see a 6-7 percent rise in sales of Class 3 to Class 8 products, helping Hino secure 45-50 percent internal growth.

Our Class 3 and Class 4 products have the highest selling rates, as big players such as PepsiCo, Bimbo, FEMSA and Jumex place most demand for these types of models. Hino trucks offer better fuel consumption, making our products perfect for distribution companies. To date, light trucks represent our biggest source of revenue. PepsiCo operates 200 Hino hybrid vehicle units. Among our other big clients for these units during 2015 were Jumex, Tresguerras, Sigma, FEMSA, Paquetexpress, Nestlé and Unilever.

Q: What strategy has Hino employed to expand its presence in the Mexican market?

A: Our first strategy is to expand the company’s product portfolio. This year we will enter the 6x2 and 6x4 truck markets and that of rear-engine buses, generating significant growth. Hino already expanded its product line in 2015, selling close to 200 front-engine buses. In addition, we are considering immersing ourselves in the small truck segment, to compete with pickups from Ford and Nissan, and the tractor-trailer market, which will help us reach our 10 percent market share target much faster.

In 2015, we trained more than 4,300 operators from 900 different companies, completely free of charge. Hino’s technology is already designed to offer high fuel yields but with proper training fuel consumption can be improved by 30-40 percent. This positions our brand as an attractive option for the market. We also perform studies on customers’ operations to assess the viability and cost- effectiveness of their products. Several companies and fleets are showing increasing interest in hybrid vehicles, but not all entities are ready for them. Diesel vehicles remain important in Hino’s portfolio, as electric units are unlikely to be part of our short-term future.

Q: To what extent have its financial services helped Hino gain customers and expand its market share?

A: Financial services have helped the brand immensely and Hino has benefited from its alliance with Toyota Financial Services Mexico. We built this relationship in 2012, leading to the introduction of financial services for Hino in 2013. We have the most competitive interest rate in the market at 10 percent per year. Before our alliance was created, Hino secured an average of 30 yearly contracts. In 2015, the company secured 700 contracts. Our financial offer was not the only factor behind this significant leap. Hino’s sales points have also expanded considerably, with more distributors across the country helping the company reach the market more efficiently. Our overdue portfolio has remained at 0 percent during the first three years, giving Hino better margins than Toyota itself. Thanks to this support, Hino granted a more competitive interest rate and its distributors enjoy an opening fee that incentivizes the brand’s presence.

Q: What are Hino’s principal expansion goals and forecasts for 2016?

A: In December 2015, Hino added one distributor in Colima, and we expect to include two or three others in Mexico City and Monterrey by the end of 2016, mainly targeting Toyota distributors. Hyundai and KIA’s entry to the Mexican market affected the profitability of Toyota’s distributors. These distributors are looking to expand their market segments, for which Hino is the perfect partner.

Hino’s overall sales since our inception in Mexico hit 10,000 vehicles in August 2015. We expect to close 2016 with a total of 3,000 vehicles sales but our target remains conservatively set at 2,800. This will help us reach our goal of 10 percent market share. Our greatest task for the future will be managing human capital growth and the expansion of distribution points and product lines. As new regulations regarding ultra-low sulfur diesel will come into force, we have taken precautions to be ahead of the curve, preparing our production plants for new technology.

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