Business

Daimler Truck sees a continuing high demand for trucks

Production at Daimler Truck

The largest truck manufacturer in the world has been independent of the former parent company Daimler since 2021.

(Photo: dpa)

Munich If you want to know how the world economy is doing, you can see a lot in truck sales figures. Because little can be saved more easily in an impending recession than planned spending on capital goods like articulated lorries.

Following this logic, heavy commercial vehicle orders are expected to actually collapse ahead of the war in Ukraine, high inflation, rising interest rates and ongoing restrictions due to the crown pandemic.

But: the opposite is true, at least if you believe in Daimler Truck.

“We are not seeing cancellations,” said Martin Daum, CEO of Daimler Truck, during the virtual general meeting of the Dax Group, according to the text of the speech. The 62-year-old manager sees the world’s largest manufacturer of heavy trucks and buses in an “exceptional situation that we can use to cushion a moderate economic downturn”.

Tagus Top-jobs

Find the best jobs now and
be notified by email.

The reason: Many shippers have been looking forward to new vehicles for months. Due to the lack of semiconductors, suppliers such as Daimler Truck were able to supply far fewer articulated trucks than required last year. Many of the Swabian customers are now “so far behind in fleet renewals that they urgently need new trucks and can no longer put off new purchases,” explains Daum. Daimler Truck can hardly escape orders.

Daimler Truck: Price increases of more than ten percent

Production for this year is completely sold out. “And even if some orders were to be canceled, that would only mean we would go from overheating to a normal state,” says Daum. “Therefore, we remain confident for the current year for good reason.”

At the moment, almost nothing seems to be able to slow down the business of Daimler Truck. The group recently raised its prices in Europe and North America by more than ten percent. Most customers swallow this service without much grumbling. They are lucky if they get a vehicle.

Martin Daum

Daimler Truck CEO can submit complete order books.

(Photo: dpa)

Anyway: After a rather difficult first quarter, the chip supply is slowly improving. “Therefore, we clearly see our key figures in positive for the full year,” says Daum. Specifically, Daimler Truck aims to sell more than 500,000 vehicles by 2022. Sales are expected to increase from 40 to 50 billion euros and operating profit is also expected to increase significantly.

The shareholders are very satisfied with the development of the company. Not a single countermotion was presented ahead of the Annual General Assembly. Nine out of ten analysts currently recommend buying the group’s shares. The Swabian stock was recently listed slightly below the issue price of 28 euros after the IPO in December 2021.

For more than a hundred years, Daimler Truck has been something of a “second business” for the Mercedes-Benz car manufacturer. Last year, however, the truck business was spun off from the dominant automotive division. Since then, Daimler Truck has operated as an independent company. Although Mercedes still holds 30 percent of the company’s shares, it no longer has any operational influence.

“Daimler Truck has achieved a lot and learned a lot in these first few months of independence,” explains Joe Kaeser, chairman of the supervisory board of Daimler Truck. The former Siemens boss believes that those who move forward with courage and consistency can achieve big changes and have a positive effect. At the same time, what is arguably the largest restructuring of all time in the transportation sector is underway.

Competition from trucks creates higher margins

Indeed, the turnaround in commercial vehicles – away from the dominant diesel engine and towards hydrogen-based batteries and fuel cells – is expected to lead to a significant reduction in the more than 100,000 jobs worldwide in the coming years.

The group is already looking to bail out to meet its return goals and bridge the gap to the competition. For decades, major competitors such as Volvo Trucks or Paccar have been doing business much more profitably than Daimler Truck. More recently, the edge of rivals has been double that of the Suebi.

It should now gradually change. The group aims to increase adjusted return on sales from 5.9 percent in the first quarter to between seven and nine percent for the full year. In three years, the margin in the industrial business should therefore be double-digit and remain stable at this level. The signs are good.

Moreover: Mercedes hires Chinese manager McKinsey as chief strategy officer

First published: 06/22/22, 10:32 am.

About the author

hiyabad

Leave a Comment