Alejandro Mondragón
CEO
Scania Mexico
/
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Scania Mexico Taking Aftersales to a New Level

By Alejandro Enríquez | Thu, 03/11/2021 - 05:00

Q: What were Scania’s milestones in 2020 and its lessons learned from the pandemic?

A: These have been really atypical months. No one foresaw in their yearly planning a pandemic as a threat but this circumstance highlighted strengths and opportunity areas in our business model. Most of our business focused on long-distance buses when Scania at the global level is best known for its heavy trucks. In Mexico, we are used to selling more buses than trucks and in 2020, for the first time ever, we sold more trucks than buses due to the pandemic. In fact, in 2020, we grew around 40 percent in trucks compared to 2019 in a market that dropped 40 percent in sales. This is one of our milestones. Transportation companies are starting to realize the added value and benefits that Scania provides.

One important lesson was to evaluate the impact of the pandemic on our bus line. We have three verticals. First, coach, which is by far the most affected segment since practically all units remained stopped. Second, inter-city buses, where we have more volume and although affected, there are signs of a slight recovery. The third and least affected vertical is inner-city buses, where we still do not have a strong presence.

Q: What expertise do you bring to the Mexican commercial vehicle sector as Scania’s new CEO?

A: I have eight years of experience at Scania, between 2005 and 2014. From 2014 to 2020, I moved on to SABIC in the Netherlands. I returned to Scania as CEO in Mexico starting on Aug. 1, 2020. This is a really interesting question because the heavy-vehicle industry in Mexico is similar to what I experienced in the Netherlands. Clients purchase the vehicle and they take care of the maintenance. Ten years ago, we changed that model and started to install Scania workshops at our customers’ patios, growing our leadership in the market. My experience in SABIC’s mining division proved that such an approach was not a novelty. In mining, it is essential to have a maintenance workshop on the client’s patio.

I am introducing best practices for the heavy-truck segment. There are many opportunities in this regard. I want to make the most of our operations by providing maintenance services at our customers’ facilities. Another relevant element is on-field service, which is different from the service provided at our customers’ patio. We can provide every service at our client’s facilities or we can work through a subscription service in which technical staff provides assistance regularly. This business model is not mature enough in Mexico for heavy trucks. The vast majority of on-field services in Mexico are reactive rather than preventive. During my time, there will be a radical change in this regard.

Q: Scania has increased its market share consistently over the last few years. What are the keys behind this success?

A: Success comes from a very well-defined business strategy and its added value. Mexican customers are starting to realize that Scania offers the best aftersales service. We will continue on that track while being proactive in adding services in the field, at our customers' facilities and more. I was part of the team that started to revolutionize the way aftersales was delivered in the country. We will continue to revolutionize the market, taking advantage of artificial intelligence, vehicle connectivity and more technological features that will help us to optimize aftersales. We used to dream about providing the right maintenance at the right time. Now, with the vast amount of data generated, we can improve maintenance curves substantially while maximizing fleet availability. This is part of what taking the aftersales to the next level means.

It is important to highlight that every vehicle we sell comes with a maintenance policy, which is really attractive for our customers. The ratio of customers that come back to us is really high. Technology, service and aftersales are part of the formula. Our goal for 2021 is to increase our sales and it is easier if our customers keep returning to us.

Q: What is your perspective on the renewal of the Mexican heavy-vehicle park?

A: Scania is about to enter the used segment. To ensure the resale value of the vehicle is to address an additional concern for our customers when they want to sell the vehicle after five years. Our vehicles have a great resale value despite customers’ concern regarding the market’s knowledge about our brand. We will also address this concern through our used segment. We are building on our maintenance policy to do this, as we know the quality of the service each vehicle has received. Therefore, resale value remains high as the unit remains certified by the OEM.

Q: What is your perspective on the role European OEMs are playing in the Mexican commercial vehicle market?

A: This trend is not based on assumptions but on facts. Chile, Europe and Australia are examples. In every region where European and US standards compete, European standards always win over American standards. The market in Mexico has experienced that. Expos used to be all about long-nosed trucks but now they are full of cab-overs, including MAN, Mercedes and us and Asian competitors. Cab-overs are the most efficient and in the long-run Mexico will start to experience this transition.

Q: How is NOM-044 influencing the heavy-vehicle market?

A: We would have preferred Euro VI to be enforced now. Our slogan is “driving the shift” and this shift is toward more sustainable transportation. At some point, we will migrate to new technologies such as natural gas and electric vehicles. Within our portfolio, we have Euro V and Euro VI models available for the Mexican market. Approximately one-third of the vehicles we sold in the country in 2020 were vehicles fueled by natural gas. Different technologies are available in the country but there are other challenges to be solved.

Q: How has Scania supported its customers throughout the bottlenecks in plating processes?

A: We are empathetic with our customers. After closing a good deal to acquire new vehicles, they cannot pick up their trucks as the lack of a license plate prevents them from hitting the road. This has been a headache. We have tried our best, having a special team focused on accelerating the processes at different locations while supporting ANPACT in its efforts to move this topic forward.

Q: How is the heavy-vehicle segment contributing to the economic and social development of the country?

A: Commercial vehicles are the backbone of the country. In Mexico, land transportation does not compete against railways; they are complementary. In fact, we would do even better should more railroads open. We are a vital part of the economy due to all the goods we move. However, there should be a better balance, with passenger trains and more railroads, while leaving heavy-duty trucks for last-mile deliveries. I vote for Mexico to follow Europe in transportation infrastructure. Europe has the most efficient logistics network.

Q: What are Scania Mexico’s priorities for 2021?

A: First and foremost, we want to continue adding value to our customers through our aftersales service. Our customers must be aware that when they purchase a Scania truck or bus, they are building a relationship with us. Aftersales is our sales pitch. Customers will buy again if we support them well. We made structural changes in Mexico aligned to that purpose.

We are already leaders in the aftersales service but we want to widen the gap with our competitors. Having a maintenance policy results in greater benefits. We are transforming a fixed cost into a variable one. Customers pay Scania for the number of kilometers they drive. When our customers experience this, they realize we are taking aftersales to a whole new level. All our business divisions are deeply integrated.

 

Scania is a Swedish company that manufactures heavy trucks and buses. It also builds diesel motors for industrial and marine applications. The company is active in more than 100 countries with a global workforce of 52,000 employees

Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst