Mercedes-Benz eyes top position in VN truck market

Monday, Nov 17, 2014 09:40

An MBV worker assembles a passenger car. The company has announced plans to enter the truck market and hopes to become the market leader. — VNS File Photo
Mercedes-Benz Viet Nam (MBV) launched its Fuso truck at the beginning of last month. Viet Nam News spoke with CEO Michael Behrens about the launch, his company's business plans, and the upcoming motor show.

In October, when introducing the Fuso, MBV announced that trucks would be the second pillar of the company's business in future. Can you tell us more about this? Why have you chosen now to start a new business, which also signifies a return to the commercial segment after stopping production of the sprinter minibus two years ago?

Michael Behrens

As you might know, two years ago, we stopped producing the long-running sprinter minibus.

We wanted to put our company not just on one, but two pillars: passenger cars and trucks. Under a single roof, both divisions are capable of standing strongly, meaning we can better weather any potential economic challenges.

The main factor in running the truck business is that it is one of the five business units of Daimler. We are the number one in truck manufacturing in the world (484,000 units sold in 2013, 1/3 of the world commercial vehicle market).

In addition, the truck segment has very strong potential in Viet Nam. It is the dominant mode of transportation in this country.

Furthermore, foreign companies are currently strongly investing in the logistics business, thus requiring more professional vehicles.

How will the company's strategy change now? Will it have any impact on your car business? How much do you see trucks contributing to your company's profits and revenues?

Of course not, Mercedes-Benz and Fuso are different in terms of segments and target customers. We have separate strategies for each segment. Moreover, we also set up a whole new department with specific positions requiring insight and expertise in this industry.

In this transition year we are able to match the sales of last year. This in itself is an ambitious target.

The company seeks to become a leader in the Vietnamese truck market? What is the basis of your belief that you can achieve this?

Our trucks will be a three-party collaboration: professional management of Daimler group, product and technology from Japan, and Vietnamese operating expertise. This "tripod" spirit will enable our trucks to be a key player in the market.

At our company, the Japanese technology of Fuso will be backed by advanced facilities and assembly lines. For example, the truck body frames will be plated by the most advanced zircobond electro-dipping coating technology available anywhere in the world, enhancing their resistance to heat and corrosion. Moreover, with the German-Vietnamese management, which is accustomed to the highest CSI (customer satisfaction index) standards, our brand will further strengthen customer service levels across the organization, including dealer network.

Do you plan to expand your plants to serve the new business?

We keep investing in Viet Nam's future. Last year, we earmarked US$10 million for a new zircobond ed coating facility. This year, we spent another $10 million for new production lines and expanding our network. Since July 2014, we set up in the first medium duty truck (MDT) production line ever of Fuso in Viet Nam. The first Fuso light duty truck (LDT) was also rolled out last month from our factory.

Companies invest with a long term horizon. Currently we are in talks with the Government to sustain and grow the local automotive industry at the same time that ASEAN and the lowering of (automotive import) tariffs is kicking off.

This does not have to be a contradiction. The Government's new automotive market plan is now being detailed. The Vietnamese Automotive Manufacturing Association (VAMA) is optimistic that this will lead to improvements for those companies that are not simply importing but also locally assembling.

Where do you see the Vietnamese truck market headed in the near future? Do you think the government's campaign to crack down on overloading of trucks will affect it? What should the Government do to develop the truck market?

The government has strengthened strict control over trucks' loading capacity, and has announced new regulations about the upper body of trucks. Overloading is no longer permitted.

That is a great opportunity for trucks and more importantly, it improves road safety for drivers and all traffic partners.

Where do you see the industry in general and your company's business in particular after the ASEAN economic community is established in 2015 with import taxes gradually abolished?

This is a positive year for the Vietnamese automotive industry with an average growth of more than 30 per cent. Mercedes-Benz Viet Nam doubled that with 60 per cent growth. This shows the high demand and the recovery of the economy in the luxury segment. Also, auto brands have made a lot of effort in launching new products at reasonable price ranges that most customers can afford.

In 2015 import taxes will not much affect the competitive advantages of locally produced automotive brands. In the premium segment, there is no brand being imported from ASEAN countries. In other segments, imported cars have to meet the ASEAN local rate of more than 40 per cent to get the tax incentives. Not many cars are in this list.

For the upcoming Asia Pacific conference of German business (APK) 2014, what are your expectation and message as joining this special economic event?

This is a fantastic opportunity to showcase Viet Nam. Bilateral relations with Germany are in excellent shape. Germany is present with educational highlights like the German-Vietnamese university near HCM City or great art centres like the Goethe Institute in Ha Noi. And Prime Minister Nguyen Tan Dung recently visited Germany and our chancellor Angela Merkel. He and his fellow ministers also paid a visit to Daimler the head quarter in Stuttgart, a great honor for all involved.

The APK, for which MBV is a main sponsor, will underline the strong commitment Germany has to Viet Nam. Key topics will obviously be investment and education. MBV has a long-term view on Viet Nam with nearly 20 year presence in this country and excellent effort in training its staff. We are committed to staying in Viet Nam, and stay ahead.

Motor show, the biggest auto industry event, is coming soon. Will Mercedes-Benz have any surprises for us there?

This year we have the biggest booth at the Sai Gon Exhibition and Convention Centre - 630sq.m at one of the most attractive and convenient locations. We have an outside area for "proven exclusivity", these are the pre-owned Mercedes-Benz cars. Six new cars will be launched at the motor show.

With the theme of "sensual purity" our booth design concept and all our display cars will be in black and white – a pure and highly sensual setup. Our booth design is inspired by technology highlights of our products - for example, the intelligent led headlight system of the s 500 coupe with Swarovski crystals or the burmester 3d sound system. Furthermore, the new C-class and the new Gla are expected to be the highlights of this year's motor show. So all I can say is: come and c for yourself! — VNS

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