Daimler Truck — Upside 2014

by Monitor Staff Nov/Dec 2013
Juergen Rochert and Martin Daum share their thoughts with the Monitor regarding Freightliner's success and Daimler Truck Financial’s role in supporting the Class-8 market's leading brand.

Martin Daum: Current economic factors support a healthy trucking industry. However, despite the strength of the present positive economic barometers, fleet age continues to increase as customers delay acquisition of new vehicles. It is true initial vehicle prices have contributed to this delay; however, customers who recognize the critical importance of total cost of ownership over initial price have commenced investing in new vehicles that have a proven ability to reduce costs over time. A perfect example is the Freightliner Cascadia Evolution, which has received rave reviews and acceptance in the marketplace since its launch earlier this year.

MONITOR: Now that we are in Q3/13, what would you say is Daimler’s outlook for the trucking industry in 2014, and what are some of the key drivers that will impact the ultimate outcome?

MD: Daimler Trucks North America (DTNA) anticipates an approximately flat market with slight upside potential in 2014 for U.S. Class 8 and a flat outlook for U.S. Class 6-7. We expect sales and share to be primarily driven by fleets seeking solutions that rely on improved total cost of ownership, and we anticipate the continued success of our market penetration to be bolstered by the expedited customer adoption of our industry-leading Freightliner Cascadia Evolution.

MONITOR: The Freightliner brand is typically the market share leader in Class 8 retail truck sales each year. Can you provide insight into why this is so and comment on the role that Daimler Truck Financial has played in supporting the success of the brand?

MD: The successes are due to the products. The 2014 Cascadia Evolution is nearing 20,000 orders since the model’s start of production in March 2013. Powered by the newly designed DetroitDD15 engine, the Cascadia Evolution features aerodynamic and efficiency improvements that deliver up to an additional 7% improvement in fuel economy over an EPA 2010-compliant Cascadia, and up to 5% improvement in fuel efficiency over the 2013 Cascadia with first-generation aerodynamic enhancements. Detroit powertrain components, including the new Detroit DT12 Automated Manual transmission and Detroit Axles, can provide additional benefits that further contribute to the truck’s reliability, durability and performance. Market share for DTNA’s brands totaled 41.2% of the market in U.S. Class 6-8 through September 2013.

Juergen Rochert: Daimler Truck Financial’s (DTF) mission is to support DTNA’s sales and dealer network. The DTF team understands the customers’ business and will always work hard to design the financing package that meets the customers’ needs. This added value was most clearly proven in the financial crisis, when most financing sources left the commercial vehicle market in a hurry.

MONITOR: We understand that Daimler Truck Financial went into 2013 coming off the strength of a record-breaking 2012. Can you please comment on how Daimler Truck Financial is performing thus far this year?

JR: The DTF portfolio has nearly doubled in size since 2010 to well beyond $8 billion (as of September 2013). These results are due to a very clear strategy, solid understanding of the trucking markets, our customers’ business models and requirements, the exceptional dedication and hard work of all employees and the team’s excellent relationships with our customers and dealers.

MONITOR: What are a few of your short-term and long-term goals for Daimler Truck Financial, as we close out 2013 and move into a new year?

JR: DTF continues to be focused on creating value for DTNA, our dealers and customers. With an improving economy, most of the so-called “fair-weather lenders” have re-entered the commercial vehicle market, so we are well under way implementing a number of internal projects to improve our processes and gain efficiencies.

MONITOR: As a captive, we perceive that you enjoy certain benefits by being so closely affiliated with your parent. From a competitive position, what advantages does operating as a captive provide your business? Furthermore, could you please comment on Daimler Truck Financial’s penetration rate and the role this metric plays in running the business?

JR: There are very clear benefits to being a captive finance provider. We can align our strategies, understand the products and their lifecycles and offer complete packages to our customers and dealers. In addition, we can make a tremendous difference during the more difficult times and circumstances. Obviously, Freightliner’s success as the undisputed market leader is also a clear benefit to our business.

Penetration rate is indeed one of several key metrics used to measure success; however, it does not drive our day-to-day decision making. As long as we consistently execute on our value proposition by providing competitive financial solutions, top service to our dealers and customers, and continuously improve everything we do, volume and penetration rates will follow. DTF’s penetration rate through the end of September 2013 is 23%, which is an all-time record.

MONITOR: It’s been well chronicled that truck orders have been driven primarily by replacement needs versus expansion. Have you seen signs that this mix has changed and, in your view, why or why not?

JR: We are fortunate to support many of the top trucking fleets in the country and our new financing activity is indeed primarily driven by replacement needs. With the average age of trucks being six years old or more, depending which source you follow, there is clearly pent-up demand. But real growth is likely to be dependent on further improvements in the economy.

Martin Daum is president and chief executive officer of Daimler Trucks North America. Daum has leadership and visionary responsibility for DTNA and its affiliated companies — Freightliner Trucks, Western Star Trucks, Thomas Built Buses, Freightliner Custom Chassis Corporation and Detroit Diesel Corporation. With Daimler since 1987, Daum was appointed to his current post in June 2009. In his most recent assignments, he was member of the executive committee of Mercedes-Benz Trucks in Europe since 2002. He was the senior vice president of Production for Mercedes-Benz Trucks, head of the Unimog Special Vehicle Division and, prior to that, head of Mercedes-Benz Trucks Controlling. Daum previously held several executive positions for Daimler Trucks in North America including general manager of Finance at Sterling Truck Corporation and head of Controlling for the Light Truck Concept. Daum earned a master’s degree in economic studies from attended Universität Mannheim.

Juergen Rochert is vice president of Daimler Truck Financial USA for Mercedes-Benz Financial Services USA. In his current position, which he has held since January 2010, Rochert is responsible for all activities within Daimler Truck Financial USA and is a member of the company’s executive leadership team for the Americas region. Previously, Rochert was president and managing director for Daimler Financial Services Mexico. He has held several positions of increasing responsibility within the Daimler AG organization in Europe and North America for more than 30 years. He earned his bachelor’s degree (Diplom Betriebswirt) from the Berufsakademie in Stuttgart, Germany and a master’s of business administration from the University of Connecticut. He is a member of the World President’s Organization (WPO) and a board member of the World President’s Organization Motor City Chapter.

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